Head of international equities at Credit Suisse, Russell Bye, believes the robust returns achieved in the face of a variety of economic conditions is a key factor in winning this year’s Money Management Fund Manager of the Year international equities category.
Bye says its international share fund “has had very consistent performance since its inception, which is now over 13 years ago”.
“Over 13 years you’ve had all sorts of different market conditions, bull markets, bear markets, tech markets, value markets, quite a lot of political instability over that period of time such as September 11, and the fund has performed well virtually all of the time through that,” he adds.
Walter Scott, with its Global Equity fund, is a finalist in this category, with its distributor Macquarie Bank citing the manager’s boutique structure as a strength.
“The key defining characteristics of the business are that it’s privately-owned, it’s got a highly experienced investment team, and the other differentiating feature would be its proprietorial research as a key value-adding activity,” Macquarie division director financial services group Peter Shepherd says.
The third international equities finalist is GMO, with its Global Equity fund. This fund is run from London using models developed in the corporation’s Boston office with its forte being discipline.
“Its discipline and diversification sets it apart from its competitors. It uses a blend of value strategies and momentum strategies, which put together produce a better risk adjusted outcome than simply using either one of those strategies. They tend to work in an uncorrelated way,” GMO executive director Paul Chadwick says.
The ability to identify the right geographical areas in which to invest is always critical to the success of a global equities fund and Credit Suisse has tended to look to Japan at the expense of the US in recent times.
“In the last year or so we’ve been well overweight in Japan. That’s been our most significant overweighting. We’re overweight in Europe as well and well underweight in the US. The US trailed the markets last year and the other markets did very well,” Bye explains.
However, identifying the best industries to complement the geographical selection is also very important.
“It’s been the financials, particularly in Japan, and also some of the technology companies both in Europe and Japan. Also healthcare, particularly in Europe,” Bye says.
Japan has also been a popular choice with Walter Scott but with different industries being targeted.
“There’s an overweight in the portfolio to energy, energy services and healthcare. Countrywise that means Japan/Asia would be the biggest exposure. In context, benchmark exposure MSCI weight for Japan is around 12 per cent while portfolio weight is around 38 per cent currently, so it’s significant overweight to Japan,” Shepherd says.
“Likewise, Asia ex-Japan benchmark is about 1.2 per cent weighting and the fund is around 10.3 per cent. The corresponding underweight is predominantly America, which is about 50 per cent market weight relative to benchmark,” he adds.
International shares
Winner: Credit Suisse Asset Management
Finalist: GMO Australia
Finalist: Walter Scott
