Australia, Funds Management, Personal Finance - Written by Chris Wright on Thursday, May 1, 2008 15:03 - 0 Comments
Just one global share fund made money in the last year
Australian Financial Review, Managed Funds Quarterly, May 2008
The first quarter of 2008 was miserable for international equity fund managers – although not quite as miserable for their Aussie-only counterparts. The MSCI World ex-Australia index was down 12.4% in the first quarter, and according to Mercer Investment Consulting, the median overseas shares managed fund did even worse than that, at a 12.7% loss, after fees.
This was an environment in which the single best performance in the entire market for the March quarter was a 8.5% loss: Orbis Global Equity. In fact, out of 101 funds in the Mercer survey, only five kept their losses in single figures.
The picture is even worse when viewed over the year to March 31, with the median fund down 14.2%. In that context, actually making money over the last 12 months is remarkable, and one fund actually managed it: the RCM Global Equity Unconstrained fund. This fund is up 4% for the year despite a 10.7% reverse in the first quarter.
The RCM approach allows the fund to go heavily into cash – that’s part of the reason it’s called “unconstrained” – and when the AFR spoke to Paul Schofield, a director in the global equity team in London, in February he said the fund was still 40 to 45% in cash, although valuations were starting to look attractive. “As we’re not constrained by a benchmark we can be a lot more thematic relative to other mainstream global funds,” he says. “We were clearly the right side of the oil price and commodity price [holding Rio Tinto ahead of the takeover bid proved lucrative]; and we have had a very large underweight to the financial sector generally, which in this environment has been the right trade.”
The RCM fund does tend to move in and out of positions very quickly, with perhaps more turnover than is common. “In the [northern] summer we put a lot of cash balance to work particularly in Asia, and a week or 10 days later closed those positions down again,” he says. “The core of the portfolio is fairly stable but we can be a bit faster paced.”
Some other funds highlighted in the last Managed Funds Quarterly remain the leading names over the 12 months to March 31. The EQT Intrinsic Value International Fund, which invests in markets rather than individual stocks, is the leading value-biased fund with a 5.2% loss in the year to March 31 (despite a big 14.1% hit in the first quarter); the Marvin & Palmer Associates Composite fund, which focuses on large cap growth stocks and follows trends such as materials, energy and industrials, is the best-ranked growth fund, down just 1.3% (although it took a huge 18.6% hit in the first quarter).
But what of the first quarter leaders? The Orbis Global Equity fund – which, like both Intrinsic Value International and Marvin & Palmer, reaches Australian investors through Equity Trustees – held a heavy overweight position in Japan as of March 31 (25% of the portfolio, compared to 8% of world markets), although that’s hardly likely to have helped performance given the state of the Japanese stock markets. It was also overweight Asia ex-Japan (18% of the fund), and in particular Korea, accounting for 10% of the fund including top holding Samsung Electronics. Other top holdings include Mitsubishi UFJ Financial, Microsoft, CVS Caremark and Comcast.
Two home-grown international share products have also fared the first quarter storm a little better than most: the Perennial International Shares Composite Fund and Perpetual International Shares Fund, both of them down 8.9% in the first quarter. Contributors to the Perennial fund’s outperformance included Gamestop, a US electronic games retailer; Wal-Mart de Mexico; and General Electric, despite the reaction to its disappointing recent performance result. Other good contributors included the French bank BNP Paribas, and the UK support services company, Interserve.
The Perpetual fund, while not tied to a benchmark, actually looks very close to the MSCI World ex-Australia index in its geographical allocations: 46.1% in North American shares, 41.7% in European shares including the UK, 10.8% in Asian shares including Japan, as at March 31. Its biggest holdings are Johnson & Johnson, Nestle, Total, Novartis and General Dynamics.
Leave a Reply
Most Popular Content
- In Flight: the 30-hour novel
- The battle for the Libyan Investment Authority
- Discovery Channel Magazine: the 30-hour novel
- Discovery Channel Magazine: the Great Fire of London
- Discovery Channel Magazine: Fixing Food
- Editorial: Tax relief
The Jakarta Post | Editorial | Mon, December 31 2012, 1...
- The World Bank estimates that forcible “development-induced displacement and res...
- Your article on Microfinance in Eastern Europe is spot on. In fact the key point...
- I'm intrigued but also a little confused by what is going on in the ...
- Hi Chris - loved your smartinvestor article which actually defines investsors' s...
- Could I have this whole poem written by Thomas Ebzery - I am moved by it because...
- I know it is personal but is it possible to obtain a copy of the poem Thomas Ebz...
- I felt very, very sad after reading this beautiful articles. My late dad was sn...
Featured Work, Libya, Sovereign Wealth Funds - Apr 1, 2013 23:23 - 0 Comments
More In Featured Work
- The science of cheating
- Qatar: What has it done with stability?
- Giant steps are what you take
- Euromoney: the shadowy world of Gulf sovereign wealth funds
- Playing with fire: a history of the guitar
Africa general, Big Interviews, Science and engineering - Dec 1, 2012 6:12 - 0 Comments
More In Big Interviews
- Emerging Markets: Zeti interview
- Ed Mitchell: the most famous believer
- Yeager in his own (harsh) words
- Reach for the sky
- So you want to be an astronaut?
Big Interviews, Economics, Featured Work, Foreign Exchange, From the Vault, Malaysia, Politics - Oct 1, 2007 9:52 - 0 Comments
More In From the Vault
- Green finance: cleaning up in China – Euromoney, September 2007
- China’s rainmakers – Euromoney, April 2007
- Shaukat Aziz, Pakistan prime minister: Institutional Investor, December 2006
- The Shariah scholar cartel: Asiamoney, September 2006
- Ethical funds melt down over uranium – AFR, March 2005