The top five consistently-performing global funds
Markets have faced such varying conditions over the past three years that only five global equity funds have consistently outperformed their peers, Money Management research shows.
Generating sector-topping returns in 2019, 2020 and 2021 has been a challenging achievement – 2019 was the last ‘normal’ year before the COVID-19 pandemic hit, 2020 was beset by an unprecedented shutdown in economic activity and 2021’s re-opening kickstarted inflation.
In light of this, Money Management reviewed the Australian Core Strategies (ACS) Equity Global sector for funds that made first-quartile returns in each one of the past three years. Just five out of 322 funds – or 1.6% – managed this feat and they are listed below:
Source: FE Analytics
The highest three-year return of the five funds that made the cut came from BetaShares Global Sustainability Leaders ETF, which was up 121.3%. This compared with an average return of just 64.5% from the ACS Equity Global sector.
Tracking the Nasdaq Future Global Sustainability Leaders index, the passive fund offered exposure to “companies considered to be genuinely fossil fuel-free climate leaders”. More than 40% of the portfolio was held in tech names such as Nvidia, Apple and Cisco, with another 16% in healthcare and 14% in financials.
CFS FirstChoice Wholesale Geared Global Share is listed second, following a 107.2% total return across 2019, 2020 and 2021. The fund’s geared approach meant returns were enhanced through borrowing, which explained some of its outperformance, but it was worth noting this also meant it could fall harder in down markets (which happened in 2018).
Its multi-manager structure meant portfolio management was outsourced to a range of specialist managers. The firms that constructed the portfolio at present were Ninety One, WCM Investment Management, AllianceBernstein, JO Hambro Capital Management, Acadian Asset Management and Baillie Gifford.
Two ETFs providing exposure to quality stocks also topped the ACS Equity Global sector for three years in a row: VanEck MSCI World ex Australia Quality ETF (up 102% over the entire period) and BetaShares Global Quality Leaders ETF (up 98.1%).
Quality investing – which picked stocks on the basis of factors such as quality of balance sheets, earnings, company management and corporate governance – performed very strongly over the long term, as well as over the past three years. While the MSCI AC World index made 306.5% over the past 10 years, the MSCI AC World Quality index was up 415%.
Performance of quality stocks vs broader market over 10yrs to 7 February
Source: FE Analytics
The final global equity fund to top the sector in 2019, 2020 and 2021 was the $1.4bn Apostle Dundas Global Equity fund, which was managed by a team from Edinburgh-based Dundas Global Investors.
The firm took a “defensive growth” approach, which sought out companies with strong and sustainable returns on equity and a growing dividend stream. Its largest overweight was to technology stocks, with the likes of Microsoft, Accenture, Alphabet and Apple among its biggest holdings.
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