Van Eyk Researchhas awarded five managers — Alliance Research,Barclays Global Investors, Capital, Massachusetts Financial Services and Wellington (Global Research) — its highest ‘AA’ rating in its 2003 Global Equities Sector Review.
The review rated 28 global equities managers, favouring managers with relative flexibility in terms of style, which are not constrained by benchmarks and prepared to take higher risk, which have a strong focus on valuation and have a well-diversified portfolio.
However with a brighter but still uncertain outlook on the horizon, “opportunistic” managers which cover a number of segments in the market or style neutral managers are expected to perform best.
Van Eyk lead analyst on the report, Dragana Timotijevic says, “We see the improved market and economic conditions continuing for most of the next twelve months. Beyond this investors may face some challenging twists and turns due to fundamental imbalances in the global economy and the relatively high valuation of the US market.”
The review also found that over the longer term investment style was not a differentiating factor in delivering performance, while the shorter term returns suggest that the dispersion in performance between value and growth managers has now moved back towards neutral.
“Returns over twelve, six and three months have shown no dominance of style factors, and we believe this pattern is likely to continue over the next two to three years,” Timotijevic says.
Performance figures for the three years to August 2003 were bleak, with all managers except forPlatinumproducing negative returns. However on average managers in the review outperformed the MSCI Index in one, three and five years to August 2003.
Timotijevic commented that in line with an improving market environment, managers have increased exposure to growth, quality stocks in their portfolio, particularly in the technology and communications sector.
In terms of country allocation, managers remained underweight in US stocks and overweight in European and Asian stocks, with an increase in weightings to Asia in the last year.
