Long-term, sustainable strategy key to global equities success

Generation Investment Management’s Generations Wholesale Global Share fund has won the Global Equities category at the 2019 Money Management Fund Manager of the Year Awards, beating out this year’s Fund Manager of the Year, AllianceBernstein, and Ironbark Royal London.

Established in 2004, the firm has over 190 years of combined investment experience, and according to Colonial First State’s general manager of investments, Scott Tully, has honed its process over a range of market conditions to become a stable and experienced manager.

Tully told Money Management that the fund’s investment philosophy was led by the conviction that long-term investing was best practice, and sustainability factors, including economic, environmental, social and governance criteria, could materially affect long-term business profitability.

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“Generation’s competitive advantage is based on its ability to successfully integrate sustainability research with fundamental equity analysis into a seamless investment approach,” Tully said. “This strategy focuses on identifying high-quality businesses with high-quality management teams that Generation believe offer a significant margin of safety from a valuation perspective.”

Runner-up, the Ironbark Royal London Concentrated Global Share Fund, credited its success to an exceptional year of stock picking, and its managers require strong balance sheets and a margin of safety in every investment.

The AB Global Equities Fund was also a runner-up, which similarly employs a bottom-up stock picking approach, with particular attentions to companies’ long-term (10 years and above) ability to consistently grow the value of their business, their management culture of respecting stakeholders, and using estimated cash flows to identify when to buy and sell stocks.

“Our approach to picking stocks is entirely benchmark unaware, and our analysts are free to look for opportunities in the broadest universe of public equities,” co-chief investment officer, Global Core Equity, Klaus Ingerman said. “However, our portfolio is constructed in a manner that ensures a behaviour that mimics the broad global equity market.”

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