Pendal has announced the launch of its Global Select Fund in Australia with a key focus on the differentiation of its strategy.
The US$5.3 billion fund has been one of Pendal’s most successful international investment strategies since it was brought to the firm’s UK-based asset manager JOHCM in 2008.
It has delivered 3.13 per cent annualised alpha before fees when compared to its benchmark MSCI All Country World NR Index.
Developed and managed by Chris Lees and Nudgem Richyal since 2004, the strategy involves a quantamental investment process that takes advantage of the benefits of both quantitative and fundamental research.
“Equity markets are like real estate, you don’t buy a good house in a deteriorating suburb,” said senior fund manager Lees.
“Essentially, we look for stocks we like in good or up and coming ‘neighbourhoods’ – economies, sectors, industries. Neighbourhoods are screened for valuation, fundamentals, momentum to identify if they are improving or deteriorating.”
The fund’s portfolio includes between 30 and 60 stocks which are all equally weighted to help identify underperformers, reduce concentration risk and provide greater exposure to midcaps.
Compared to other global equities funds, Pendal said the Global Select Fund’s portfolio was “very different” and mostly centred around long-term compounders, stocks in early-stage growth and stocks undergoing a transformation or recovery.
The fund has never held Amazon or Netflix, and has previously sold out of Apple, Facebook and Alphabet.
“We’ve delivered top-quartile investment returns in the last 20 years without holding the mega caps,” said Mr Lees.
“By performing without owning the same stocks that are likely already in most global portfolios gives clients the opportunity to ‘zig’ when other strategies ‘zag’, to provide more consistent overall performance.”
