S&P global equities review shows strong recovery

Standard & Poor’s latest international equities sector review reveals a significant recovery in global equities, with a high number of four-star rated managers featured in the review.

The 99 investment strategies covered include 13 upgrades and seven downgrades, with most strategies unchanged, according to S&P.

“While fund managers remain cautiously optimistic about the longer-term global economic recovery, they also believe that current conditions are likely to lead to ongoing market volatility in 2010,” said S&P fund analyst Justine Gorman.

The MSCI All Country World Index returned 5 per cent in the 12 months to 31 December 2009, boosted by a strong commodities performance in emerging markets.

The report found that many international equity managers were making sizable contributions to active risk at the sector level, which tended to be beneficial to performance.

Growth managers held around 9 per cent more in IT stocks than value managers, who were more heavily invested in telecommunications, utilities, materials and cash. While value and growth produced similar returns for 2009 (2.3 per cent and 2.4 per cent respectively) value had a significantly better two-year performance of negative 12.7 per cent, compared to negative 17.6 per cent for growth.

The MSCI World Index in Australian dollars returned 1.4 per cent for the 2009 year, while MSCI World Index (hedged) returned 24.1 per cent. This large disparity was caused by the strong Australian dollar, according to S&P.