
AMP Capital NZ has already garnered local investor support for its new concentrated global shares fund, according to the manager’s head of distribution, Rebekah Swan.
Swan said the just-released Global Companies Fund (GCF) had sufficient “pre-commitments” to make the launch worthwhile in NZ.
“The feedback we’ve had from investors is that [the new fund] is different from other global share funds in the market here,” she said.
Structured as a portfolio investment entity (PIE), the GCF mirrors an already-established AMP Capital concentrated international equities strategy dating back to 2014. In 2017 AMP packaged the strategy into an Australian unit trust, seeding the fund with internal money.
Since inception – about 18 months ago – the Australian version of the GCF has returned over 65 per cent compared to about 26 per cent for the benchmark MSCI All Country World Index (ACWI).
Swan said the while the GCF is “benchmark unaware”, the ACWI (ex-tobacco) forms the first hurdle in calculating the performance fee. However, to earn the performance fee (of 15 per cent of outperformance) the GCF must sustain annualised five-year rolling returns of at least 7 per cent after fees and costs.
The NZ iteration of the GCF was officially launched on November 1 with the first performance fee calculation set for the same day in 2023 – and every year thereafter.
All up the GCF carries an estimated annual fee of 1.64 per cent (including a projected 0.45 per cent performance fee), according to the product disclosure statement.
Managed by a small team of portfolio managers headed by the London-based Simon Steele, the GCF targets a holding of between 25-35 international stocks at any one time.
As well as Steele, the GCF team includes Neil Mitchell (also in London), David Naughtin in Hong Kong and the Sydney-based Andy Gardner.
In a recently-published ‘Manifesto’, AMP Capital says the global equities team “was given a blank canvas to build a capability from scratch, allowing us to create solutions and outcomes unencumbered by historical norms”.
The strategy is “underpinned by a fundamental, research-driven, long-term philosophy and a process we believe is capable of delivering strong and enduring alpha in the fast-changing investment management environment by investing in long-term wealth creating companies”, the Manifesto says.
Among a number of core “deeply-held beliefs”, the GCF investment team focuses on fundamental research and a long-term outlook to balance wealth creation against capital preservation.
“Investors are increasingly preoccupied with the short term and do not look very far ahead. Markets are consequently inefficient over the long term, providing an exploitable opportunity,” the Manifesto says.
But the document says traditional active fund managers are struggling to profit from short-term investment strategies as automation takes hold across the industry.
“Portfolios have become less ‘human’ and more programmatic in approach, as the industry has attempted to automate the collection and analysis of results, news and data, arbitraging away any short-term informational advantage,” the Manifesto says. “This decay of near-term informational advantage is one of the greatest challenges facing active investing.”
However, while short-term strategies were being squeezed by tech long term inefficiencies were emerging as investors ignored fundamental trends, AMP Capital argues.
“It is increasingly advantageous to extend investment horizons to go where others are not,” the Manifesto says, citing a number of studies backing a longer-term approach.
Furthermore, the long-term was becoming more “ambiguous” as the global economy shifts from one based on physical assets to “intangibles” such as “innovation, patents, research & development, process know-how and intellectual property”.
“… we need to be building bottom-up fundamental insights from individual companies and freeing our active investment capabilities from the shackles of outmoded conventions in order to be successful investors in the digital age,” the AMP Capital document says.
The fund also follows a sustainable investment philosophy arguing that “shareholder wealth creation and effective environmental, social and governance (ESG) management are intrinsically linked”.