Several high-profile international boutique fund managers have upped the ante on institutional investors to go global and expand their investment universe beyond home markets.
Managers such as The Boston Company, Blackfriars Asset Management, Newton Group and Standish Mellon Asset Management have joined the chorus of international fund managers now calling on institutional investors to open their eyes to global investment opportunities.
Participating in a recent survey of boutique fund managers affiliated with BNY Mellon Asset Management, the managers highlighted the need for institutional investors to review their approach to global investing and to broaden their international allocations so they can capture the benefits of global secular developments.
These developments include the divergence of fiscal, monetary and economic conditions around the world, the outperformance of emerging market equities over developed markets and the strong macroeconomic balance sheets and well-capitalised banking sectors in many emerging countries.
The managers also encouraged investing globally in bonds, as well as taking opportunities with real estate investment trusts (REITS) and private equity.
To help manage currency exposures inherent in heightened levels of global investment, Pareto Investment Management encouraged a well-defined currency hedging policy at the total portfolio level.
The survey also found one of the biggest challenges for many institutional investors is selecting the appropriate opportunity set.
According to BNY Mellon Asset Management's investment solutions and strategies group director Jeff Saef, a strategic weighting of 40 per cent global equities, 40 per cent global debt, and 20 per cent in alternatives made up of absolute return equity, debt and currency strategies by institutional investors was a good starting point.
However, he also recommended investors apply "wider exposure bands around their strategic weightings to give nimble asset allocators the potential to capture opportunities as conditions change."
