Style not making funds look better
Style has not been a significant factor in the performance of large cap global equity funds over the past 12 months, according to the latest Lonsec Large Cap Global Equity Sector Review.
The review, released exclusively to Money Management, resulted in six funds being assigned Lonsec’s top ‘highly recommended’ rating, being Acadian Global Equity Fund, Arrowstreet Global Equity Fund, Templeton Global Equities Fund, T. Rowe Price Global Equity Fund, Walter Scott Global Equity Fund, and the Zurich Investments Global Thematic Share Fund.
It said Arrowstreet Global Equity Fund had been upgraded to the top rank from ‘recommended’, while the AXA NMFM Global Equity Value Fund and the Barclays International Share Fund were downgraded from ‘highly recommended’ to ‘recommended’.
The Lonsec analysis said of the funds rated in this year’s review, manager style such as growth, value or core had not been a significant contributing factor to performance.
“Performance has generally been poor across all managers and styles, which is not entirely unexpected given the difficult market environment,” it said.
However, it said quantitative style managers had marginally underperformed the broader global equity group over the last 12 to 18 months.
“Lonsec believes this highlights the limitations of quantitative models at market inflection points during market shocks,” the review analysis said.
It said it continued to believe managers that were willing to expand their research coverage to non-traditional areas and search for uncorrelated signals were less likely to find their signals arbitraged away and more likely to identify signals that might not have been considered by other quantitative style managers.
“In this regard, Lonsec believes a quantitative firm is driven by its forward-looking research and development agenda and the depth and breadth of its research team,” it said.
“Managers rated favourably by Lonsec are particularly strong and, in Lonsec’s opinion, exhibit a competitive advantage in these areas.”
AUTHOR
Mike Taylor
Recommended for you
The FSCP has announced its latest verdict, suspending an adviser’s registration for failing to comply with his obligations when providing advice to three clients.
Having sold Madison to Infocus earlier this year, Clime has now set up a new financial advice licensee with eight advisers.
With licensees such as Insignia looking to AI for advice efficiencies, they are being urged to write clear AI policies as soon as possible to prevent a “Wild West” of providers being used by their practices.
Iress has revealed the number of clients per adviser that top advice firms serve, as well as how many client meetings they conduct each week.
