Neutral managers win world game
Styleneutral managers have topped the rankings in the latest review of international equity managers by influential research group van Eyk.
Three style neutral managers — Barclays Global Investors, Wellington and Capital International — were the only managers in the annual review by van Eyk to achieve the research group’s highest AA rating.
The research group also recommended another 12 managers of the 37 in total it reviewed, although they failed to achieve the prestigious AA rating.
The recommended list includes a mix of value and even under-performing growth style managers, but was again dominated by managers classed as style neutral.
Also recommended by van Eyk was this year’sMoney Management/Assirt International Fund Manager of the Year, Platinum Asset Management, although the manager was reviewed separately from the other 37 managers because of its preparedness to employ short selling in its portfolio construction.
However, the best performing international equities manager over the last year, Marathon, was not recommended.
“Marathon has done well, but they are a very small shop and under-resourced and that is an issue,” van Eyk associate director Dragana Timotijevic says.
The release of the review, which has been distributed to financial planning groups over the last week, comes as many investors brace for the end of another financial year marked by poor returns from international markets — a situation heightened by the impact of a rising Australian dollar.
Surprisingly, only seven of the 37 managers reviewed by van Eyk had any policy to manage currency, a potentially perilous position for Australian investors at a time when the Australian dollar is in an upward momentum.
The managers surveyed also showed a willingness to shoot outside the benchmark in an attempt to generate added returns from an otherwise frozen international equities climate.
On average, managers in the survey invested 16 per cent of their portfolio outside of the MSCI World ex Australia index, which returned negative 19.2 per cent in the 11 months to the end of May 2002.
Managers in the survey also continued to steer clear of the US market, which returned negative 12.5 per cent in the 11 months to May. The average manager in the survey was in fact underweight in the US market by nine per cent, while taking an overweight position to Europe and a market neutral stance on Japan.
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