Off-the-shelf
model proves
popular
Advisers have been warming to the global
equity fund sector over the past few years
as they seek to benefit from the diversified
portfolios and geographic asset allocation
they can offer
By Neal UNderwood
Global equity funds as a
sector has become increasingly
popular over the past
few years as advisers seek
to further diversify both
the risk within and the
sources of return from their
clients’ portfolios.
The global equity sector
is different from the regional
equity sectors in one key
way; the funds in it are
offering investors not only
access to a portfolio of
equities but also an off-theshelf
asset allocation
model. So in many markets,
it is those advisers
who want to make use of
the asset allocation strategies
built into global equity
funds that are the often the
main outlet for funds in
this sector.
Richard Garland, managing
director, international
distribution at Investec
Asset Management, says
that in Europe the primary
market for fund products is
the discretionary – particu-
larly the fund of funds
(FOF) – market.
But this is not generally
the case for global equity
funds, since FOF managers
tend to want to do their
own asset allocation and
therefore select their own
regional equity products.
The exception, says
Garland, is in the Swiss
private banking market.
“They all have some
clients who do not have
huge portfolios,” he
remarks. “That is where
Global equity funds vs index
%
60 M’star global equity fund sector avg
40
20
0
-20
Nov ’05 May ’06 Nov
May ’07 Nov
24 Oct ’05 – 27 Oct ’08. Source: Morningstar
they use global equity
funds. It is not a huge
market in Europe but there
is that segment.”
l Competitive market
In the retail market in
Europe and in the UK there
is considerable appetite for
global equities, he says,
but competition is fierce.
Investec has had some
success with its Global
Strategy Equity Fund,
which adopts a bottom-up
MSCI World Grs $
December 2008 [www.international-adviser.com] INTerNATIONAL ADVISer 21
May ’08
Nov
Fund selector Global equity
unconstrained approach
with a focus on absolute
alpha generation.
“It depends on what
type of global equity fund
you are talking about,”
Garland says. “Even in
FOFs we have seen some
interest – it can be seen as
a more specialist product.
It is not correlated – there
is a pure focus on alpha.”
In the Americas, the
target market for these
funds sits somewhere
between IFAs and funds of
funds, says Garland. As
in Europe, while larger clients
typically want to do
their own asset allocation,
smaller clients are often
happy to gain equity exposure
through a diversified
global fund.
“This is a market which
we sell into. It is not a
retail market, it is a hybrid,”
he adds.
Asia has two strong
retail markets in particular,
in Taiwan and Hong Kong,
and again these are focus
markets for Investec.
“
Even in funds of
funds we have seen
some interest – it can
be seen as a more
specialist product.
It is not correlated –
there is a pure focus
on alpha
”
richard Garland, managing
director, international
distribution, Investec
asset Management
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