FMOTY 2023: Spotlight on Global Equities
In the lead up to the Fund Manager of the Year Awards on 22 June, the Global Equity finalists have shared their thoughts on the asset class.
The five finalists in the category were:
- Lazard Global Equity Franchise Fund
- Barrow Hanley Global Share Fund
- Arrowstreet Global Equity Fund
- PM Capital Global Companies Fund
- Realindex Global Share Value (Class A)
Click here to view the full list of finalists.
All of the funds outperformed the MSCI World Index, while gearing towards value-based stocks offering attractive valuations despite global volatility.
Warryn Robertson, portfolio manager and analyst at Lazard Asset Management, noted that the Lazard Global Equity Franchise Fund performed strongly in both value and growth market environments.
“We are fundamental value investors, but the Global Equity Franchise Fund has shown an ability to outperform even in the largely growth markets of the last decade, having outperformed in each of the calendar years from 2014 to 2018,” he told Money Management.
On a one-year basis, the fund was 3.8 per cent ahead of the MSCI World Index as of 30 April 2023. It outperformed the benchmark by 7.1 per cent p.a on a three-year basis.
“The fund is celebrating its 10-year anniversary this year, and over the time it has returned 14.5 per cent (per annum net of fees), beating the MSCI World which has returned 12.5 per cent over the same period,” he added.
The firm remained cautious of the global environment due to high inflation across developed markets and recessionary risks.
“Equity markets generally look expensive, and we expect volatility to continue. In our view, cautious, value-based stock-selection remains critical to generating positive returns,” Robertson observed.
The Barrow Hanley Global Share Fund had benefited from Perpetual Investment Management’s consistent process, collaborative culture and value investing.
“We believe investing broadly across both cyclical and defensive value stocks as a ‘true-to-label’ traditional value manager can provide a smoother ride,” said a Perpetual spokesperson.
The fund had outperformed the MSCI World and MSCI World Value Indices over one and three-year periods to March 31 2023.
“Consistent with the fund’s objective, the strategy has provided asymmetrical results over the past five years, having captured 113 per cent of the upside returns in the market while only capturing 98 per cent of the downside returns,” they added.
Although growth performance was demonstrating a strong resurgence in 2023, the larger outlook for global equities brought its challenges.
“It’s too early to say whether global markets will experience a hard or soft landing, but slowing economic data could mean greater risks to the downside.”
According to Luis Sarmiento, division director and investment specialist at Macquarie Asset Management, the Arrowstreet Global Equity Fund blended human insight and computational tools to support strong long-term performance.
“The fund combines a large, experienced team of researchers with a quantitative investment approach that can apply investment insights at speed and scale across the entire investment universe,” he said.
Within a challenging market, the fund outperformed its benchmark over the last three calendar years.
“A difficult economic environment can result in a greater difference between the returns of companies, and we believe active fund managers like Arrowstreet are well-placed to take advantage of the resulting opportunities for outperformance,” Sarmiento added.
David Walsh, head of investments at Realindex, described that the Realindex Global Share Value (Class A) had followed a consistent and disciplined process.
“Our team is very strong in terms of both experience and insight, and we continue to innovate our process and model while remaining true to our origins, despite the headwinds the value has faced,” he commented.
The portfolio was wary of dangers posed by ‘cheap for a reason’ stocks, and utilised models which minimised exposure to these for a comparative performance edge.
“These are difficult and uncertain times for global equities. Probability of a global recession remains high, as does inflation,” he identified.
“That said, certain growth channels associated with long-term systemic trends have protection and consequently more certainty – for example, technology (through the growth of AI) and healthcare (ageing population).”
The PM Capital Global Companies Fund exhibited strong performance by identifying investment anomalies and capitalising on their full return potential.
“Consistent with our approach, we are particularly pleased with our strong results over the last 7 and 10 years and since the fund’s inception more than 24 years ago,” said Kevin Bertoli, co-portfolio manager of global and Australian equities.
Winners of the 2023 Fund Manager of the Year Awards will be announced on Thursday 22 June 2023 at a black-tie gala awards ceremony at The Star in Sydney.
AUTHOR
Jasmine Siljic
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