Where a company is domiciled is no longer such a focus for global equity managers.

Bronwen Moncrieff, Senior Investment Analyst at Zenith said “Barriers that may once have existed and encouraged the separation between developed and emerging countries are decreasing. The development of technology such as the internet, near instant access to global events and ease of travel are just a few factors that have played an important part in making the world become a smaller place. As a result, many developed market domiciled company’s now generate an increasing level of revenue from emerging market consumers, and many emerging market domiciled companies are increasing their level of exports to developed market countries.”

“The flow through impact of this change is influencing the portfolio construction approach for many managers. Where a company is domiciled is becoming less and less relevant. Research is focusing on where a company’s source of revenues or target market demand is coming from – not where a company is domiciled or listed.”

“At a fund or product level, this is influencing factors such as the choice of benchmark, and the % of a fund that can be invested in emerging markets. For the benchmark, there has been a gradual move away from the MSCI World Index to the MSCI All Country World Index, which broadens a fund’s potential investable universe by virtue of the inclusion of emerging markets. The other change has been a gradual increase in the degree a fund can be invested in emerging market domiciled companies. Funds that may have once had a restriction on holding emerging market domiciled stocks may now be allowed to hold a portion of the portfolio in emerging markets, or funds with an existing emerging market allocation limit have been increasing that limit.”

“There may come a time when you don’t need to have separate global and emerging market funds – one fund might be able to provide you with exposure to both, in fact many funds now do just that.” Moncrieff said.

Performance over the last 12 months has clearly been very difficult. The MSCI World ex Australia ($A) index generated a very modest positive return of 2.3% for the 12 months ending 31 July 2012. The majority of regions have experienced declines.

The financials sector continued to post negative returns and the energy and materials sectors have suffered with the decline in resource demand and commodity prices. On the positive side, sectors such as consumer staples, consumer discretionary, healthcare and technology have all fared well.

Certain investment styles (core, value, growth for example) are suited to different market environments, and it is fair to say the market environment has generally been tough for all managers. However, for this review, it was the value managers that generally outperformed their core and growth style counterparts over the short, medium and long-term (5 years).

Zenith’s International Shares Sector Review represents the largest sector review undertaken by Zenith. Of the 59 global, regional and specialist funds that undertook the full due diligence process, 17 funds achieved Zenith’s top rating.

Zenith’s Highly Recommended Funds
* Aberdeen Asian Opportunities Fund
* Aberdeen Emerging Opportunities Fund
* Arrowstreet Global Equity Fund
* Arrowstreet Global Equity Fund (Hedged)
* Goldman Sachs International Wholesale Fund
* IFP Global Franchise Fund
* IFP Global Franchise Fund (Hedged)
* Magellan Global Fund
* MFS Concentrated Global Equity Trust
* MFS Fully Hedged Global Equity Trust
* MFS Global Equity Trust
* Platinum Unhedged Fund
* Walter Scott Global Equity Fund
* Walter Scott Global Equity Fund (Hedged)
* Zurich Investments Global Thematic Share Fund
* Zurich Investments Hedged Global Thematic Share Fund
* Zurich Investments Unhdg Global Thematic Share Fund

The following new funds were added to the Recommended List following the completion of due diligence for this sector.

Fund Name/New Rating
* Altrinsic Global Equity Fund/Recommended
* Aubrey Global Conviction Fund/Recommended
* Fidelity China Fund/Recommended
* Franklin Global Growth Fund/Recommended
* Martin Currie Emerging Markets Fund/Recommended
* MFS Concentrated Global Equity Trust/Highly Recommended
* MFS Fully Hedged Global Equity Trust/Highly Recommended
* Schroders Global Quality Fund/ Recommended

The post Zenith 2012 International Shares Sector Review appeared first on AdviserVoice.

From an initial universe of 34 Domestic Long/Short Funds Zenith has rated 3 funds “Highly Recommended”, 14 funds “Recommended” and 1 fund “Approved”. The 18 funds that were rated are shown below with their respective ratings and segregated into Global Funds, Regional Funds and Sector Funds.

Global Funds
Platinum International Brands Fund –  Highly Recommended
Platinum International Fund – Highly Recommended
Five Oceans Wholesale World Fund – Recommended
K2 Select International Absolute Return Fund – Recommended
PM Capital Absolute Performance Fund – Approved

Regional Funds
Platinum Asia Fund – Highly Recommended
K2 Asian Absolute Return Fund – Recommended
KIS Asia Long Short Fund – Recommended
Platinum European Fund – Recommended
Platinum Japan Fund – Recommended
Premium Asia Fund – Recommended
Premium China Fund – Recommended
8IP Asia Pacific Partners Fund – Recommended

Sector Funds
Platinum International Technology Fund – Recommended
Platinum International Health Care Fund – Recommended
Pengana Asia Special Events Fund – Recommended
Pengana Global Resources Fund – Recommended
Premium SAM Asia Property Fund – Recommended

Platinum’s Ratings – Zenith Maintains Strong View
Given the prevalent use of Platinum by our clients and the questions that have come up around the recent underperformance of some of Platinum’s funds, we thought it would be useful to provide a brief comment on why we have re-affirmed our strong ratings on Platinum’s suite of products post this year’s due diligence reviews.

While some of the Platinum funds have had softer performance numbers more recently, we are inclined to continue to back the manager. We note that Platinum takes very contrarian views on many stocks and themes in the market and that this style of management does not work consistently across the market cycle.

In more recent times the manager has been positioned in areas that have been overlooked and neglected by the market based on risk off trades. Zenith feels that investors that hold the course with Platinum are likely to be rewarded. Historically, given Platinum’s high conviction style, when performance has turned it tends to turn quite quickly.

Overall, Zenith believes that the level of quality across the Platinum team remains excellent and from the meetings with all of the portfolio managers across the firm we believe that they remain across all the issues in their portfolios.

The post Zenith 2012 Global Long/Short Equities Sector Release appeared first on AdviserVoice.

“The GVI team has recently experienced some staff turnover, although the manager has been proactive in its recruitment efforts. Stephen Arnold, a senior analyst and equity holder is the most recent departure. New hires are Grant Cullens in a senior role and two junior equity analysts. Mr. Cullen’s appointment helps to diversify the portfolio decision-making process while enhancing the team’s macroeconomic considerations,” said S&P Fund Services analyst John Huynh.

The post S&P assigns Three-Star ‘New’ rating to GVI Global Industrial Share Unhedged Fund appeared first on AdviserVoice.

• Their overweight home loan portfolios
• Their regional outlook
• Their recent dividend performance

Sydney-based international equities manager, Insync FM, does not hold any banks in its 25-stock portfolio of the Insync Global Dividend Growth Fund. Why is that?

For Insync FM, banking stocks simply do not make the grade for investment at this stage. The key reasons are:

• Banks have too much leverage  – Insync FM can get the same return from a stock like Nestle with no leverage without buying a bank that is running at 10 – 20 times leverage
• Banking is a commodity business – it is hard to differentiate their products from each other. Thus, where is the pricing power? How will it add to their share price or dividends?
• Consumers are deleveraging and therefore banking profits won’t be benefiting from a quick uptick in consumer borrowing
• More Government regulation for banks means higher capital and liquidity requirements which will eat into profits. Have we seen the full effects yet of Basel III on bank profitability? We think not.
• Banks can face liquidity troubles well before insolvency issues become a concern for an economy, e.g. Ireland and Iceland. Therefore investors need an above average return to compensate for the added risk.

“Many banks are well run but there are better international companies for a global portfolio at this time. You could not look at any developed market banks, particularly Australian banks, and comfortably add them to a high-conviction global portfolio given their risk profiles and their recent cuts to dividends. Anyway, it would be difficult to rate any Australian banks as truly global given their overweight home loan portfolios and their regional outlook,” said Mr Monik Kotecha, CIO of Insync FM.

The post Insync FM Doesn’t Hold Banks in its Global Portfolio – Why not? appeared first on AdviserVoice.