CC-BY-SA-2.0, FlickrPhoto: Rakib Hasan Sumon. Meeting the Challenge of Feeding the Planet
When you think about it, the expansion of agricultural output since the Second World War has been nothing short of miraculous. However, the system underlying that expansion is highly vulnerable to factors that are now staring us in the face. These include a dependence on relatively stable climatic conditions, the consequences of single-crop practices, excessive use of antibiotics, fertilisers and pesticides, and fast and efficient transport explains Alexandre Jeanblanc, SRI investment specialist in Paris at BNP Paribas Investment Partners.
The Food and Agriculture Organisation (FAO) now estimates that to feed humanity in 2050 agricultural output will have to expand by 70%. As this target will have to be achieved without placing additional burdens on the global environment, it will doubtless require many simultaneous initiatives such as:
supporting broader-based efforts to limit climate change, including better energy usage
restricting farmland expansion while increasing yields and reducing agricultural pollution to preserve ecosystems
reducing water usage to ease pressure on water tables
preserving topsoil quantity and health, in part by enhancing fertiliser efficiency
moderating the use of livestock antibiotics
halting the ecological impoverishment of the oceans and regulating fish-farming
“To meet these enormous challenges, agricultural production systems will have to evolve and adapt, not least by expanding research into “sustainable” farming. Some solutions already exist, as a number of successful developments have already demonstrated” writes Jeanblanc in his company blog. These include:
the domestication of water in Israel,
drip irrigation, which is increasingly common in California,
recycling containers in the Nordic countries,
the replacement of chemical fertilisers with organic ones,
permaculture (high yields but labour intensive),
the development of more efficient systems for food preservation,
precise systems for dosing inputs.
These solutions will have to be rolled out on a large scale to safeguard the environment against the impact of higher agricultural output. “New forms of decentralised and smaller-scale agriculture may equally be worth exploring. There is no single solution, but multiple strategies – from the way land is used, to new ways of thinking, making financing available and developing accessible technologies. Public education is also vital – both to reduce food wastage (one third of food currently produced is thrown away) and change dietary habits (eating less meat would help to optimise grain consumption). But none of these alone holds the key to meeting future challenges” says the expert.
“We are probably just at the start of a vast transformation in farming methods. Farming tomorrow will have to be efficient, economical and environmentally friendly. Technologies continue to improve and offer prospects for progress that would have been unimaginable just 10 years ago. But they will require heavy capital outlays. Will governments be able to rise to these challenges and thus support their farmers? Will they be able to choose unconventional environmental solutions (such as permaculture, for example)? Will consumers agree to pay more for food? The portion of GDP from agriculture has shrunk constantly over the past 50 years to less than 2% in 2014 in many developed countries. Has the time come to change our ways of thinking and our development models?” He wonders.
It is in companies that are firmly committed to meeting these challenges that BNP Paribas Investment Partners’ environmental funds invest.
Although most companies have perfected the art of managing analysts’ expectations, the corporate earnings season is producing fewer surprises although the general trend of a slowdown in profits seems to be continuing. This is the view of Guy Wagner, and his team, published in their monthly analysis, ‘Highlights’.
After the rebound in February and March, equity markets saw little change in April. The S&P 500 in the United States, the Stoxx 600 in Europe, and the MSCI Emerging Markets (in USD) gained respectively during the month, while the Topix in Japan gave up a bit. “Since most companies have perfected the art of managing analysts’ expectations, the corporate earnings season is producing fewer surprises although the general trend of a slowdown in profits seems to be continuing. The main support for the equity markets is the lack of alternatives, even though the deterioration of economic fundamentals is of increasing concern”, says Guy Wagner, Chief Investment Officer at Banque de Luxembourg and managing director of the asset management company BLI – Banque de Luxembourg Investments.
Stabilisation of China’s economy is due to the government’s stimulus measures Although the global economy is continuing to grow, there has been notable divergence in the different regions’ performance in recent weeks. While growth in US gross domestic product (GDP) slowed on the back of weak investment and exports, China’s GDP climbed. “However, the stabilisation of China’s economy is once again due to the government’s stimulus measures which are exacerbating the country’s excessive debt problem”, believes the Luxembourgish economist. In Europe, economic growth is stable despite a host of political crises. In Japan, the hoped-for economic recovery under the ‘Abenomics’ plan has not yet materialised.
Europe: no prospect of a change to the ECB’s accommodative monetary policy stance As expected, the US Federal Reserve kept its key interest rates unchanged at its April meeting. Fed Chairman Janet Yellen left the door open for a potential increase in interest rates during the year, although she remained very reticent about such a probability. In Europe, in response to a raft of criticism in recent weeks, European Central Bank’s (ECB) President Mario Draghi justified the rationale of the negative interest rate policy. Guy Wagner: “There is no prospect of a change to the ECB’s very accommodative monetary policy stance of recent years.”
European government bonds could despite weak or even negative yields gain Bond yields rose slightly in April. Over the month, the 10-year government bond yield inched up in Germany, in Italy, in Spain and in the United States. “In Europe, the main attraction of the bond markets, despite their weak yields, lies in the prospect of interest rates going deeper into negative territory and this being implemented on a greater scale by the ECB during 2016. In the United States, the higher yields on long bond issues give them some residual potential for appreciation without having to factor in negative yields to maturity”, concludes Guy Wagner.
CC-BY-SA-2.0, FlickrPhoto: Robert S. Donovan. Asia is Primed for Innovation
The massive buying power of Asian consumers has far-reaching significance, especially for aspiring entrepreneurs focused on ground-breaking new products. Innovators have existed in every market in Asia, most notably in South Korea, Japan and Taiwan. However, the overall value created has been constrained by their smaller market size since such homegrown inventions have been unique to their domestic markets. Today, this has completely changed, explained Michael J. Oh, CFA, portfolio manager at Matthews Asia. Key innovators in Asia now target their own regional market—and Asia’s middle class is quite homogeneous in many respects, meaning they may share similar cultural backgrounds, tastes and aspirations. Let’s look at South Korea’s cosmetics industry for example.
Human resources, another key source of competitiveness for innovators in Asia, is something that tends not to be in short supply in Asia. Each year, a highly educated workforce of millions hails from North Asian countries and India. South Korea’s young population, for example, has a notably high proportion of college graduates and the country has one of the highest ratios of higher education degrees earned among OECD (Organization for Economic Cooperation and Development) countries and the highest in Asia for those aged 25-35, according to the OECD and UNESCO.
According to the expert, asian companies are also increasing spending on research and development. In fact, many policymakers in Asia have made innovation a national, strategic priority. The global share of research and development spending by Asian companies surpassed that of U.S. companies in 2011, and the gap continued to widen in 2015. The effort has given rise to numerous research hubs equipped with good infrastructure and skilled workers. In this way, Asian companies are increasingly laying firm foundations for future innovation.
“An important trend we are seeing is innovation moving from East to West. This is most evident in the Internet services and consumer products space. For example, Amazon recently started a one to two-hour delivery service in some key cities in the U.S., and is investing in developing its own logistics as a key competitive advantage. This business strategy was started by leading Chinese entrepreneurs and companies early on. Initially, many investors had doubts over its potential for success, but the development of one’s own logistics has in fact become a global trend among many e-commerce companies. And most leading e-commerce companies in India and South Korea are making related investments in order to improve customer experience and satisfaction levels. It seems Amazon is also taking a page from this approach”, point out Matthews Asia portfolio manager.
In another area of prominence, China is leading the world in financial technology and, along with Indonesia, has among the highest levels of mobile banking penetration. In fact, Internet companies in China are penetrating deeper into the everyday lives of Chinese consumers in almost every respect. Internet companies have touched upon just about every major life purchase—from cars to homes to insurance products. Mobile Internet penetration in China is among the highest in the world, and China is often leading the innovation, creating new markets and services in the mobile Internet space.
“Asia can also claim to lead in some areas of traditional technology products, including next-generation display technology, known as organic light-emitting diodes (OLED), that will power future mobile devices and TVs, as well as lithium batteries—essential for many mobile devices and electronic vehicles. Almost all lithium batteries used in electronic vehicles today are made by companies based in Asia, and Asian companies are spearheading the development of next-generation batteries to power the global electronic vehicle industry”, explained Michael Oh.
Innovation is Key for Growth and Survival
Innovation can create value even during slower growth environments, which is important at this juncture since Asia in general is likely to transition more gradually, explained the strategist. For example, South Korea has long been a pioneer in the e-commerce industry and its market has become relatively mature with among the highest penetration rates in the world. It also has the highest e-commerce penetration rate in the Asia Pacific region with an online shopping reach of approximately 62%. But even in this relatively mature market, new companies with inventive marketing and distribution strategies have been able to grow exponentially—in one instance, one created a market value of approximately US$5 billion in just five years. This is particularly relevant to Asia today as many parts of the region adjust within a slower growth environment.
But for Oh, it is also important to note that innovation is not only limited to technology industries. Innovation can happen in any industry—old or new. Let’s look at transportation for example. Transportation is an old industry but a newcomer like the ride-sharing service Uber has completely changed the industry. Uber disrupted the century old industry with new ways of providing transportation services enabled by new mobile technology. Within the tourism industry, companies like Airbnb are doing the same, enabling people to capitalize on under-utilized assets by connecting the supply and demand of accommodation rentals via mobile technology. This is just the beginning for the ways in which technology is reshaping older industries.
Even in the automobile industry we are witnessing tremendous changes brought by electronic vehicles (EV). EV is likely to have far-reaching impacts beyond the automobile industries as it influences energy consumption patterns.
Oh highlights in a recent post in Matthews Asia blog that Japan and China, the region’s major auto powerhouses, have been ramping up the competition over the type of technology and power that may be adopted as the global standard for electric cars. China, which has famously been grappling with pollution issues, now has many locally funded EV start-ups that hope to usurp Tesla Motors. Beijing has been pushing for EV autos, offering buyer incentives, compelling global automakers to share their technology, and opening its market to tech firms. Japan, on the other hand, has invested heavily in fuel-cell technology and infrastructure as part of a national policy for the zero-emission fuel to power homes and vehicles.
Looking Ahead
The explosive growth of China’s emerging middle class brought sweeping economic changes to the global economy and these changes are still ongoing. Asia also has many emerging countries whose middle class has not yet entirely emerged. The ASEAN (Association of Southeast Asian Nations) region, which includes Indonesia, Malaysia, the Philippines, Thailand, Myanmar, Vietnam, is a compelling area of focus for future growth. With an overall population of about 625 million, this region holds exciting potential despite still being relatively poor with an overall middle class that is still relatively underdeveloped.
“We believe that Asia innovators can create value for Asian consumers and long-term shareholders on the back of a vast market that has been created in the Asian marketplace. Companies that can create unique products and services that are well-suited to meet the demand created by rising disposable incomes and improving lifestyles should be well rewarded by the market, and we believe this will continue to foster more innovation. This virtuous cycle will be one of the major trends in Asia going forward and be a sustainable value creator for long-term investors”, concluded.
CC-BY-SA-2.0, FlickrPhoto: Jennie O. How Lyxor’s Enhanced Architecture Program Can Boost European Pension Funds’ Performance
Europe’s pension funds face significant challenges as a result of low interest rates, volatile markets and regulatory constraints. Lyxor’s Enhanced Architecture Program (LEAP) helps institutional investors address these challenges.
The program offers its participants significant cost reduction, reporting, risk management, governance and return benefits. Amber Kizilbash, Global Head of Sales and Client Strategy at Lyxor Asset Management, explains how LEAP works and why operational effectiveness is such a hot topic.
“Pension funds face increasingly urgent demands to improve their overall performance. Lyxor’s Enhanced Architecture Program (LEAP) empowers them to achieve a step change in their infrastructure and investment effectiveness, via a collaborative, top- down approach. It is a modular, open architecture program from which investors can choose either a comprehensive duciary management solution or individual modules”, explains Kizilbash.
Lyxor experts offer clients a range of specialist skills, such as the design of the legal and infrastructure framework, the negotiation of service provider agreements, risk management, fund selection and management.
A successful LEAP implementation can result in significant eficiency gains, offering better value for money for the pension funds’ ultimate clients saving for retirement.
LEAP benefits pension funds in two ways.
The first is by enhancing funds’ infrastructure, thereby increasing operational effectiveness. Many pension funds suffer from a duplication of roles amongst service providers, both across schemes and across countries. This duplication of efforts leads to a sub-optimal cost structure and a challenge in ensuring effective governance.
The second way in which LEAP helps investors is by providing access to state-of-the-art investment solutions. Many large pension funds have access to sophisticated in-house investment resources as a matter of course. LEAP puts these capabilities at the disposal of small and medium-sized pension funds, which may lack the scale to run such investment programs on their own. Via LEAP, Lyxor accompanies clients in implementing advanced tailored solutions along the full investment value chain, from liability-driven investment (LDI) and strategic asset allocation up to fund selection and management.
According to the European Fund and Asset Management Association (EFAMA) the European investment fund industry during the first quarter of 2016 saw net sales of UCITS and AIF which reached EUR 37 billion, compared to EUR 171 billion in Q4 2015. The sharp drop in net sales was mostly due to lower net sales of UCITS.
EFAMA points out that UCITS net sales registered net outflows of EUR 6 billion, compared to net inflows of EUR 122 billion in Q4 2015. Long-term UCITS, i.e. UCITS excluding money market funds, recorded net outflows of 4 billion, compared to net inflows of EUR 83 billion in Q4 2015.
Equity funds recorded a turnaround in net sales, from net inflows of EUR 57 billion in Q4 2015 to net outflows of EUR 3 billion in Q1 2016. Net sales of multi-asset funds slowed down from EUR 31 billion in Q4 2015 to EUR 6 billion in Q1 2016. While Bond funds continued to record net outflows, i.e. EUR 9 billion, the same level as in Q4 2015.
UCITS money market funds also saw a turnaround in net sales, from net inflows of EUR 39 billion in Q1 2015 to net outflows of EUR 2 billion in Q1 2016. AIF net sales amounted to EUR 43 billion in Q1 2016, compared to EUR 48 billion in Q4 2015. The solid net sales performance of AIF reflected the good net sales level of equity funds (EUR 7 billion, compared to net outflows of EUR 5 billion in Q4 2015), and of multi-assets funds (EUR 20 billion, compared to EUR 15 billion in Q4 2015).
Given this, total European investment fund net assets decreased by 2.1% in Q1 2016 to EUR 13,039 billion. Net assets of UCITS fell by 3.4% in Q1 2016 to EUR 7,907 billion, and total net assets of AIFs only decreased by 0.1% to EUR.
Bernard Delbecque, Director of Economics and Research at EFAMA commented on these results: “The stock market sell-off in early 2016 and uncertainties about the future direction of interest rates had a negative impact on the net sales of UCITS during the first quarter of 2016. On a positive note, the net outflows remained very limited (0.07% of UCITS assets), and AIFs continued to show solid net sales level. This confirms that UCITS and AIF investors are resilient to market volatility”.
Foto: Michael Pardo
. El número de inversores institucionales activos en CTAs alcanza su record en 2015
The latest report from Preqin finds that increasing numbers of active investors and a positive general view of performance among existing investors have driven inflows into CTAs over recent quarters. The number of institutional investors actively investing in CTAs reached a record 1,067 in 2015, up from 1,017 in 2014. The total assets under management for CTAs is at $241bn as of the end of Q1, up from $204bn at the beginning of 2015.
Furthermore, 69% of investors interviewed at the end of 2015 reported that their CTA portfolios had met their performance expectations for the year, the second highest proportion of any leading hedge fund strategy. In the same survey, 29% of all hedge fund investors said they planned on increasing their exposure to CTAs in 2016, while only 5% intended to decrease it.
CTAs have seen four quarters of net inflows of capital since the start of 2015, with net asset flows of $38bn in new investor capital committed to the strategy. Although CTAs returned only -0.08% in 2015, 2016 began strongly with funds making gains of 1.52% in the first quarter. CTAs as a whole saw net inflows of $13.7bn in Q1 2016, the highest of any leading strategy.
New CTA launches peaked in 2013, with 153 funds launched in the year. Since then, the rate of launches has declined; there were just 73 new fund launches in 2015 and 12 so far in 2016, just 6% of all hedge fund inceptions.
“CTAs play an important role in a number of institutional investors’ portfolios. These vehicles, operating trading strategies across a wide range of commodity and financial markets, offer the possibility of returns with low correlation to other financial markets and can smooth returns in investor portfolios. With recent widespread turbulence, it is perhaps unsurprising that increasing numbers of investors have been attracted to CTAs’ potential for low correlation to other investments.
Partly as a result of this, so far in 2016 CTAs have seen the highest level of inflows across all leading hedge strategies. Despite a difficult performance year in 2015, CTAs have seen solid returns in the opening months of 2016, and if these gains persist we may yet see further inflows from investors,” said Amy Bensted, Head of Hedge Fund Products, Preqin.
Joël Reuland, manager of the BL-Global wealth management mixed funds, answers nine questions as he presents its fund BL-Global 50.
Joël, what type of assets does the fund invest in? Joël Reuland (JR): BL-Global 50 is invested between 35% and 65% in equities, the balance being in bonds, cash or precious metals. The fund’s equity portfolio is invested worldwide in high-quality companies with a sustainable competitive advantage. The bond portfolio only invests in government bonds. Exposure to precious metals is mainly an insurance against systemic risk.
What is the management strategy? JR: Pour In our view, the fund manager’s role is largely to avoid errors: an investment that loses 50% has to double before it can get back to square one. The asymmetrical pattern of losses and gains explains our aversion to risk, to which end we are prepared to sacrifice exceptional gains. We aim to achieve asset growth over the long term by avoiding losses. Accordingly, we only invest in things we understand and we steer clear of areas outside our expertise. We don’t invest in financial stocks because they are not transparent or in mining companies as their results are too dependent on commodity price trends which we can’t predict. We are reluctant to invest in highly cyclical companies given the difficulty of accurately anticipating periods of recession. We limit potential errors by not investing in products we don’t understand.
How else can you reduce the portfolio’s risk? JR: For each proposed investment, we calculate an intrinsic value. For equities, this is based on our forecast for the company’s recurrent cash flow. To reduce the probability of losses, we invest when the share price offers a discount to the company’s intrinsic value. Losses will be mitigated as long as our investment thesis is not mistaken.
Given such a prudent approach, at what point are you prepared to take more risk? JR: We take more risks when valuation discounts are favourable. Psychologically this is not always easy as the discounts can become significant during very stressful periods on the market. This is when opportunities open up, as they did at the end of 2008 and beginning of 2009. And since we select high quality stocks, their share price tends to recover after the crisis period. Once the stress has subsided, we become more cautious again. This may mean that we don’t extract every ounce from episodes of stock market euphoria but it’s the price we pay for avoiding substantial losses. And it’s a strategy that proves its worth over a full economic cycle. What we don’t lose in the downturn more than outweighs what we miss out on during the euphoric phases. Losses and gains are so very asymmetrical…
Do you put more into bonds when you have less investment in equities? JR: To some extent, yes. However, the fund is limited to government bonds. We don’t take any corporate risk in the bond portfolio, which should stabilise the portfolio during stock market stress periods. With high debt levels around the world, our credit risk is currently confined to Germany and the United States.
This is despite the fact that yields to maturity on German government bonds are negative, even for long maturities… JR: Obviously bonds aren’t as attractive now as they have been over the last 25 years. But having said that, even with negative yields to maturity, bonds could continue to appreciate if yields go deeper into negative territory. It may seem absurd, but that is a consequence of Mario Draghi‘s negative interest rate policy. And if the ECB cuts interest rates even further, to -2% or -3% to “force” consumers to spend their savings, government bond prices will continue to rise. Eventually, this type of monetary policy is likely to be inflationary, but bonds will go up in the meantime. This is why, despite negative YTMs, we are still invested in German government bonds. However, we have confined ourselves to maturities of 2017 to 2020 due to the longer-term inflation risks of such a policy.
In the United States, YTMs are still positive JR: In relative terms, US Treasury bonds continue to be attractive. This is why the US bonds in our portfolio have longer maturities than the German bonds. But we are keeping a close watch on the situation. With such high debt, it is increasingly likely that the central banks will deploy a deliberately inflationary monetary policy. We haven’t got to that point yet but it’s getting closer. This is why bonds with longer maturities are much more risky.
Given the low attraction of bonds, is there an alternative for diversification? JR: Gold is a definite option. The more disconnected the central banks’ monetary policies become, the greater the rationale for having gold in a portfolio. The main reason why gold has not gone up more so far despite the central banks’ quantitative easing policies is that these policies have not created inflation. But weak inflation is not surprising if the technique of quantitative easing is fully understood. On the other hand, if the central banks change tack and decide to deliberately create inflation, that is certainly achievable. And at that point, the gold price will pick up. But then you never can tell. If investors lose confidence in the central banks’ disconnected strategies, it could be useful to have exposure to the ultimate currency as, unlike paper currencies, it cannot be printed at will.
What performance can investors in BL-Global 50 expect? JR: Since the fund’s launch in October 1993, BL-Global 50 has generated a return of 4.5% per annum. However, this historic return cannot be considered representative for the future now that market conditions have totally changed. Due to the central banks’ unconventional monetary policies, money market and bond investments offer almost zero yield. So everything hangs on equities which, given the scale of the economic imbalances, are likely to trade at lower valuations. Protecting purchasing power without suffering excessive volatility has become the watchword for the future. This might seem like an ambitious target, but given the virtually zero or even negative yields on offer for bond and money market investments, protecting purchasing power takes on a totally new meaning.
Last month, the European Securities and Markets Authority (ESMA) announced the outcome of its first EU-wide stress testing exercise that covered 17 of the EU’s largest clearinghouses (central counterparties; CCPs). In a report titled ESMA Stress Tests Underscore The Likely Resilience Of EU Clearinghouses But Do Not Offer A Clean Bill Of Health that was published on the second half of May, S&P Global Ratings comments on the usefulness of this exercise, the assumptions used, and the implications of ESMA’s findings.
They mention that the test focused narrowly on each CCP’s ability to withstand the counterparty credit risk that it could face as a result of multiple clearing member defaults and simultaneous severe market price shocks. The publicly communicated results cited broad findings, on a no-names basis. Nevertheless, S&P Global Ratings recognizes that this is the first such multi-CCP exercise that, to their knowledge, any CCP regulator has conducted.
“We regard it as a thoughtful and useful exercise that aids transparency in the sector, in an area where external parties can sometimes struggle to make a comparative assessment,” said S&P Global Ratings analyst Giles Edwards. “It could also serve as a catalyst to further enhance risk management standards at some EU CCPs, and ensure better consistency and comparability of CCPs’ individual stress testing methodologies.”
For S&P Global Ratings, the results of these exercises add further information, on top of their other surveillance, on the likely adequacy of a CCP’s financial resources within the waterfall. Their views of CCP creditworthiness continue to take into account other inputs, such as a CCP’s ownership structure, liquidity in a member default scenario, profitability and leverage, and sustainability as a business.
“While it was a narrowly focused exercise and identified some weaknesses, overall the results confirm our view that EU CCP regulation and supervision generally ensure a satisfactory baseline standard of CCP risk management,” said Edwards. “Looking forward, we anticipate that these stress testing exercises will become a regular fixture of regulatory oversight of CCPs in the EU and, potentially, beyond.”
Foto: Sander van der Wel
. Franklin Templeton lanza su primera suite de ETFs de beta estratégico
Franklin Templeton Investments announced on Monday the launch of its first suite of strategic beta exchange traded funds (ETFs), within LibertyShares, a new line of business. The funds track the LibertyQ indices developed with the asset management company´s team of quantitative experts who have a broad experience developing quantitative active equity strategies. “We approached the creation of the LibertyQ indices in the same way we have approached quantitative stock selection, and we believe that, just as with discretionary stock picking, all factors are not created equal—some are more correlated to certain outcomes,” said Patrick O’Connor, head of Global Exchange Traded Funds for the company.
The suite includes three multi-factor core portfolio funds and one fund that focuses on stocks with high and persistent dividend income. The firm´s strategic beta ETFs use proprietary LibertyQ indices1, which have employed a research-driven approach in customizing their factor weightings – The indices are constructed with four factors.
“Many of our clients have embraced the ETF wrapper for its benefits, including liquidity, tax efficiency and transparency, and now they are looking for more than what a traditional market cap-weighted index can offer,” added O’Connor.
The three core multi-factor funds use indices that apply an approach of using custom factor weightings—quality (50%), value (30%), momentum (10%) and low volatility (10%)—in seeking to capture desirable, long-term performance attributes.
The new funds are:
Franklin LibertyQ Global Equity ETF offers global equity exposure.
Franklin LibertyQ Emerging Markets ETF offers broad emerging markets exposure.
Franklin LibertyQ International Equity Hedged ETF offers international developed markets exposure.
Franklin LibertyQ Global Dividend ETF offers global exposure to high-quality, dividend-oriented stocks to help meet investors’ needs for income and total return.
“The launch of LibertyShares, taking an active approach to ETFs, is a strong complement to our commitment to active management,” added Greg Johnson, chairman and CEO of Franklin Resources.
CC-BY-SA-2.0, FlickrPhoto: Hernán Piñera. Investec Asset Management’s Top Performing Global Equity Income Strategy Launches in the UK
Investec Asset Management launches the Investec Global Quality Equity Income Fund for UK based clients. A replica of the existing SICAV, which has outperformed the market and delivered top decile performance since inception, the Fund is the latest addition to the UK fund range managed by Investec’s Quality Investment Team.
Aiming to generate sustainable dividend growth and attractive total returns over the long term, the Investec Global Quality Equity Income Fund is designed to provide UK investors with a dividend yield in excess of the MSCI All Country World Index. Since launching to global investors in March 2007, the existing fund has a top decile performance track-record and delivered 5.9 percent annually to global investors for the nine years since inception, versus 2.7 percent the index. Additionally, existing investors have benefited from 8.9 percent annual dividend growth since
The Investec Global Quality Equity Income strategy is managed by an experienced and global team, led by co- managers Blake Hutchins, Clyde Rossouw and Abrie Pretorius. A high conviction portfolio of 30-50 stocks, and cautiously positioned compared to the market, the co-managers take a differentiated approach by selecting world-leading Quality companies which are highly cash-generative, invest for future growth and have a proven track-record of paying growing dividends to investors, whilst avoiding more capital intensive sectors, often favoured by a number of competitor funds.
David Aird, Managing Director, UK Client Group, commented: “Given the challenges facing investors in the current climate of low rates and stagnant economic growth, coupled with the financial realities that face an aging population, investors are increasingly focused on sourcing attractive income streams from their assets whilst minimising risk to the underlying capital. We are excited to bring to the UK market the Investec Global Quality Equity Income Fund. A global fund with a proven nine year track record, it aims to deliver a smooth and steady investment journey over the long term, irrespective of market conditions.
“By investing in Quality companies with an ability to grow cash flows, whilst avoiding capital intensive sectors such as utilities and natural resources, which are often favoured by other equity income products, the Fund looks to provide lower volatility returns over the long term – something close to the hearts of our clients in today’s uncertain world.”
