Antipodes’ focus on Asia leads to best global equity returns

Antipodes’ focus on Asia has given its Global Long Only I fund the upper hand as it has topped global equity fund returns for its one-year annualised performance at 22.67 per cent at 31 May 2017, according to FE Analytics.

FE’s data showed that this was followed by Colonial First State (CFS) Generation WS Global Share fund (21.42 per cent), Lazard Global Equity Franchise (16.14 per cent), OnePath OA FR Inv Portfolio Onepath Global Share Trust (15.70 per cent), and Legg Mason QS Investors Global Equity Trust X (13.67 per cent).

While CFS led the top five with a cumulative return of 78.46 per cent over the three years to 31 May 2017, Antipodes had the highest increase from the three-year to one-year annualised performance with a 3.21 percentage point increase.

Although Antipodes’ legitimate track record has only been from July 2015, when the fund started, the fund acquired legacy funds that they were able to leverage to generate top returns.

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Antipodes Partners director and Pinnacle director of distribution, Andrew Findlay, said the fund offered stocks with a margin of safety, had multiple ways of winning, and were not dependent on one single factor.

While many global equity funds tended to focus on the US, Findlay said that almost 45 per cent of the Antipodes portfolio were Asian stocks as the US tended to be quite expensive in many measures.

“For example, some cheaper emerging market consumer stocks versus their better known more expensive Western names – Chinese spirits producer Jiangsu Yanghe and Chinese noodle maker Tingyi are cheaper expressions than the big Western brand names,” he said.

“So people are looking for defensive stocks in this environment but we think a lot of those defensive stocks are very expensive in Western markets, particularly the US.”

Findlay said many parts of Asia were currently attractive because they were cheap but this would not always be the case.

“So the opportunity is there now, developed Asia and emerging Asia have a bunch of interesting names and sectors that are very cheap relative to their Western counterparts,” he said.

For Legg Mason, its approach has been to identify stocks that were attractively valued versus their competitors but with some type of positive growth sentiment catalyst to close the valuation gap.

While seven out of its top 10 holdings were US firms, the fund experienced the largest drop in annualised performance, within the top five funds, at 4.22 percentage points.

Legg Mason’s portfolio manager, Joe Giroux, said: “Most recently the market has been very driven by sentiment with little regard to valuation causing which does not favour our approach”.

“This has resulted in our underperforming the benchmark in the near-term mostly driven by May.  More recently we have seen this reverse as we would expect,” he said.

Giroux said the fund would stick to its investment approach as they found that over time this led to outperformance.

“In the short-term investors may get caught up in sentiment and disregard valuation but over time we have found investors to return to attractive fundamentals,” he said.

While top fund, CFS, had consistently performed well over the three years to 31 May 2017, its annualised returns from three years to one year only increased by 0.15 percentage points.

Five of their top 10 holdings were US firms but the rest were diversified into UK-Dutch, Taiwanese, Irish, and Australian stocks.

CFS declined to comment on their fund’s performance.

For third place Lazard, 75.06 per cent of the portfolio were US stocks and the fund experienced a 3.09 percentage point drop from its three year annualised returns to its one year performance.