Global equity markets have continued to perform strongly over the past 12 months, despite persistent economic concerns. The ongoing liquidity forced into the global economy by major central banks has allayed short-term investor concerns. Whether the actions taken by the governments of the US, Japan and European Union provide a longer-term solution is still to be seen. Over the past 12 months, unhedged global equities products have generally enjoyed stronger returns versus their hedged peers due to the significant fall in the Australian dollar. The fall was triggered by the RBA cutting interest rates and the Fed signalling the possible tapering of its quantitative easing program.
Winner: MFS Investment Management
Zenith says: David Mannheim and Roger Morley are responsible for MFS’s global equities strategies. Zenith regards Mannheim and Morley’s experience and portfolio management expertise highly and a competitive advantage of the strategy. Given the significant firm-wide resources that Mannheim and Morley have to draw on, including a sizeable global research platform with 54 global equity sector career analysts, Zenith believes MFS is very well resourced. MFS’s investment philosophy is based on the belief that companies with sustainable, above-average growth and return prospects that have not yet been fully reflected in their valuation will outperform the market over the long term. MFS believes that active management and an in-depth, bottom-up, fundamental research approach is the most reliable way to identify companies that exhibit the characteristics of “growth at a reasonable price”. Attractive opportunities are identified by MFS’s team of global sector analysts and by Mannheim and Morley. Zenith has high conviction in the ability of MFS to deliver on its performance objectives given the strength of the portfolio management team, MFS’s global research capabilities and the attractiveness of the underlying investment philosophy and process.
Interview
When portfolio managers David Mannheim and Roger Morley hear the word “macro” their eyes glaze over.
The duo jointly manages the MFS Global Equity Trust, backed by a team of 50 stock analysts around the world.
Their unwavering focus is on bottom-up stock selection, and their investment approach – which is simply to buy and hold quality companies that can consistently grow earnings over the long term – has yielded stellar results.
The MFS Global Equity Trust returned 40 per cent (before fees) for the year to September 30, 2013, outperforming the MSCI World Ex-Australia Index by close to 6 per cent. The fund’s three-, five- and ten-year numbers are also impressive, securing it Zenith’s top “highly recommended” rating.
MFS Investment Management’s Australian chief Marian Poirier describes the fund’s approach as “Steady Eddy”.
“Our portfolio managers definitely know what’s going on around the world but they don’t allow that noise to affect their long-term outlook,” she says.
“Last year we continued to stick to our knitting and our investment calls were right.”
The fund was heavily overweight consumer staples and leisure for the year and underweight utilities, energy and financial services.
Its top holdings included Walt Disney, Nestle and Heineken. Turnover in the portfolio was low at around 10 per cent.
“We add value through stock selection and managing capacity, and we have a strong focus on stress testing and downside protection,” Poirier says.
The MFS Global Equity Trust is closed to new institutional investors but retail investors can still access the firm’s capabilities via platforms such as the BT Wrap, Asgard, Colonial FirstChoice and the Macquarie Wrap.
– Leng Yeow
Finalists:
– Goldman Sachs Asset Management
• Large team of specialist global industry analysts.
• Dedicated investment team responsible for leveraging the firm’s global research platform to suit the fund’s investment strategy.
• Experienced portfolio management team.
– Magellan Asset Management
• High regard for the firm’s management team and investment personnel.
• Robust investment process backed by in-depth modelling, research and qualitative assessment.
• Conceptually appealing portfolio construction process.
