Fidelity Global Consumer Industries, Orbis Global Equity, MFS Meridian Global Equity and Pictet Security have been able to deliver across up and down markets over the past 10 years, data from FE Analytics suggests.
Having previously explored the IA UK All Companies sector, FE Trustnet has sought out the funds in the IA Global sector that have weathered both up and down markets.
To find out which funds have been able to navigate up and down market conditions, FE Trustnet considered a number of risk metrics spanning 10 years, capturing the global financial crisis and the ensuing equity bull market.
All the funds were measured against the MSCI World index, a common benchmark among the global equity funds.
Four metrics were considered: the bull/bear ratio (which judges funds’ ability to ride upswings in the market and demonstrate lower risk in down markets), the downside capture ratio (which shows the fund’s performance in a down market), downside risk (an estimate of a fund’s potential loss in negative market conditions), and upside capture ratio (which shows the fund’s performance in an up market).
Looking across the 285-strong sector, five actively managed funds emerged with the top results across the four different metrics: Fidelity Global Consumer Industries, MFS Meridian Global Equity, Orbis Global Equity and Pictet Security.
Source: FE Analytics
All three funds have also comfortably outperformed the sector average and the MSCI World index over 10 years.
Below FE Trustnet considers the funds in more detail.
Pictet Security
First on the list is Pictet Security, the only five FE Crown-rated fund to make the grade. The $3.4bn fund has been managed by Yves Kramer since 2006 with Frederic Dupraz joining 2009.
The fund was one of two scoring top quartile rankings across each of the four risk metrics along with Orbis Global Equity.
The fund targets capital growth by investing at least two-thirds of its total assets in a diversified portfolio of companies “that contribute to safeguarding the integrity, health and freedom of individuals, companies and governments”.
As such, the fund’s portfolio has a 41.9 per cent exposure to the security services sector, with another 36 per cent held in physical security stocks, and 21.8 per cent held in IT security.
The fund’s managers use a high conviction, stockpicking approach to build a portfolio of between 50 and 75 stocks. It does not invest in companies with activities related to weapons, military or nuclear power.
“Given the persistent uncertainty surrounding the current state of the economy, we believe that securing the critical infrastructures of countries, protecting citizens’ integrity and ensuring the ability of businesses to meet their objectives is a top priority,” the managers noted in a fund update recently.
“We therefore remain confident about the fund’s ability to outpace the global equity market on earnings and cash-flow growth over the next few years, as stricter regulation is likely to remain a key driver for security, and IT systems and cybersecurity remain a priority for governments and companies.
“We are therefore confident that the fund is an attractive investment opportunity to capture a long-term trend with strong fundamentals and good diversification properties.”
Over 10 years the fund has returned 232.39 per cent (to 16 November) compared with a 146.41 per cent rise for the MSCI World index and a 102.64 per cent gain for the average IA Global fund.
Performance of fund vs sector & benchmark over 10yrs
Source: FE Analytics
The fund has an ongoing charge figure (OCF) of 1.20 per cent.
Orbis Global Equity
The only other fund to deliver top quartile rankings across all metrics was the four crown-rated Orbis Global Equity fund.
The £37.1m fund is run by the Orbis Investment Management team headed by William Gray.
The fund had the greatest upside capture ratio of the three funds. With a ratio of 112.50 per cent it outperformed the benchmark by 12.50 per cent in up markets.
The fund’s managers aim to deliver higher long-term returns than global stock markets, without taking on greater risk of loss and is benchmarked against the MSCI World index.
It currently has 81 holdings and its largest country weighting is towards the US, which represents 47 per cent of the portfolio. The fund also has a significant overweight to Asian stocks, which make up 19 per cent of the portfolio.
Over 10 years the fund has returned 201.11 per cent.
It does not have an ongoing charge, but does carry a 50 per cent performance fee for outperformance of the fund over its benchmark. The performance fee is paid into a reserve, which the asset manager draws on. The performance fee is refundable at the same rate in the event of underperformance. Last year, the fund charged a performance fee of 2.38 per cent.
Fidelity Global Consumer Industries
The €647.5m Fidelity Global Consumer Industries fund scored highly on three of the four risk metrics.
Of the funds making our final list, this fund had the best bear/bull ratio figure of 1.33. It also scored strongly on downside risk and had the lowest downside capture figure, capturing just 87.92 per cent of the MSCI World’s negative performance in a down market.
However, the fund was second quartile on upside capture and would have underperformed the MSCI World index by 5.3 per cent in an up market.
The fund is managed by Aneta Wynimko since 2015 and invests at least 70 per cent of the portfolio in companies around the world involved in the manufacture and distribution of goods to consumers.
Unlike the other funds, it has a composite benchmark made up equally of the MSCI World Consumer Staples and MSCI Consumer Discretionary indices.
The fund has returned 223.58 per cent over 10 years, the second highest return after Pictet Security.
It has an OCF of 1.08 per cent.
Performance of funds vs sector over 10yrs
Source: FE Analytics
MFS Meridian Global Equity
Lastly, is the four crown-rated MFS Meridian Global Equity fund. Like the Fidelity fund, this also scored highly on three of four of the risk metrics.
Of the four funds under review, it had the second highest upside capture percentage of 111.11 per cent. However, it recorded a second quartile downside capture figure.
The $6bn fund has been managed by David R Mannheim since 1989, he was latterly joined by FE Alpha Manager Roger Morley in 2009 and by Ryan P McAllister in 2016.
The managers focus on large-cap companies with growth characteristics and employ a ‘growth at a reasonable price’ strategy.
Over 10 years it has returned 180.82 per cent. The fund has an OCF of 1.14 per cent.