International equity funds on the up

Lonsec’s 2005-2006 large cap international equity sector review has found the asset class experienced a qualitative improvement during the past 12 months.

The review assessed the merits of 23 funds in the sector and showed five funds were awarded a ‘highly recommended’ rating as opposed to four in the previous year.

In addition, the research house found the quality of managers in the ‘recommended’ bracket was slightly better than those in the past.

The five funds to receive the top rating were the AXA Global Equity Value Fund, the Barclays International Share Fund, the UBS International Share Fund, the Macquarie Walter Scott Global Equity Fund, and the Zurich International Share Fund that earned an upgrade from ‘recommended’.

The study also identified the arrival of new managers to the Australian market through associations with local fund managers.

This development saw managers such as Acadian, which aligned with ColonialFirstState, Walter Scott with a Macquarie alignment, The Boston Company, aligned with Advance, and AQR, the new alliance partner of BT Financial Group.

In relation to the markets that contributed to the strong performance of certain managers, Lonsec found emerging markets were a major driving force.

The research house also recognised the revival of Japanese markets aided a few fund managers, and that most were reducing their holdings of US equities.

The 2005-2006 year also witnessed a modest resurgence in the performance of growth style managers after a period of domination from value style funds.