The giant funds topping their sector over all time frames: Global

GS Global CORE Equity Portfolio, Rathbone Global Opportunities and Threadneedle Global Select are the only £1bn+ funds in the IA Global sector to have posted consistent top quartile returns over one, three, five and 10 years, according to FE Trustnet.

Having looked at the IA UK All Companies sector, in the second article of the series we put the spotlight on the IA Global sector.

Over the next few weeks, FE Trustnet will be looking at the largest funds in a range of sectors that have outperformed their peer groups over the time frames typically used by investors.

The funds that appear below all have more than £1bn in assets under management (AUM) and have returned top quartile performance figures in the past one-, three-, five- and 10-year periods to the end of April 2018.

GS Global CORE Equity Portfolio

GS Global CORE Equity Portfolio is a $4.3bn fund run by Goldman Sachs Asset Management, one of the firm’s CORE range.

The four FE Crown-rated fund adopts a heavily quantitative approach to its stock selection but this is not done using numerical statistics, rather ‘factors’, which are attributed as potential drivers of return.

These factors are grouped under four key themes (quality, trends, mis-pricing and sentiment) and a scorecard is created for each stock.

Stocks with the highest ranks are selected by a team that includes more than 60 investment professionals from six offices around the world to create optimised portfolios and investment strategies.

Performance of fund vs sector and benchmark over multiple time frames

Source: FE Analytics *all figures to end April 2018

In a research note, analysts at FE Invest said: “This is the only fund we have met offering exposure to machine-learning techniques, using images provided by satellite and so on.

“The compelling investment approach is additionally complemented by a robust risk management approach.”

Using this investment approach, the fund attempts to outperform its benchmark, the MSCI World index, by 2.65 per cent each year while having a tracking error of 3.5.

Looking back over the past decade, GS Global CORE Equity Portfolio has produced an average tracking error of 3.15.

Performance of fund vs sector & benchmark over 10yrs

Source: FE Analytics *all figures to end April 2018

The fund initially failed to produce strong returns and was beaten by the MSCI World index between 2008 and 2011, as the above chart shows.

However, from 2012 to the end of April 2018, the fund has shown superior performance and beaten the benchmark by more than 2.65 per cent every year except 2016, where it beat the index by 1.19 per cent.

This means the fund has not only beaten its benchmark over one-, three- and five-year periods, but also over 10 years while posting top quartile returns in each of these time frames. GS Global CORE Equity Portfolio returned 174.54 per cent over 10 years compared to its benchmark’s performance of 145.11 per cent.

GS Global CORE Equity Portfolio launched in 2004 and has an ongoing charges figure (OCF) of 0.65 per cent.

Rathbone Global Opportunities

Rathbone Global Opportunities is the next fund on the list that has produced top quartile returns consistently throughout the past decade.

It is a four FE Crown-rated fund and is managed by FE Alpha Manager James Thomson with Sammy Dow as assistant fund manager.

Rathbone Global Opportunities relies on the experience of the fund manager and his external network of brokers and analysts.

Thomson and his team hold around 200 meetings a year with both prospective companies and companies already present in his concentrated portfolio, which normally consists of between 40-60 high-conviction stocks.

Performance of fund vs sector & benchmark over 10yrs

Source: FE Analytics *all figures to end April 2018

The manager adopts a flexible approach meaning he doesn’t specialise in company size, sector or region but looks to pick stocks first at a global and macro level before drilling down to an industry level. Themes that are identified are then used to select stocks that can benefit across the market capitalisation scale.

He does however, prefer under-the-radar and out-of-favour companies to suit his growth focus with extensive analysis conducted when looking at non-FTSE 100 companies.

Performance of fund vs sector & benchmark over multiple time frames

Source: FE Analytics *all figures to end April 2018

Over one- and three-year metrics, Rathbone Global Opportunities has posted double-digit returns and triple-figure returns over five- and 10-year periods. Over all time frames, this is superior to the returns of the FTSE World benchmark and the IA Global sector.

Rathbone Global Opportunities launched in 2001 and has an OCF of 0.79 per cent.

Threadneedle Global Select

Threadneedle Global Select is the third and final fund. Another holder of four FE Crowns, it has been run by William Davies since 2012. He took over from long-time manager Jeremy Podger, who had run the mandate since 2003.

The fund has more than £1.2bn in AUM and invests predominantly in large-cap companies that have competitive advantages.

Performance of fund vs sector and benchmark over 10yrs

Source: FE Analytics *all figures to end April 2018

While using a bottom-up analysis, Davies also places every stock in an international context because he believes that regional factors can lead to a stock being mispriced.

Davies makes use of analysts across Threadneedle, who collectively attend around 1,200 meetings every year. This means that, although the fund manager may not have met senior management of each company he invests in, another analyst from Threadneedle will have.

This collaborative culture allows managers to make use of specialist regional and sector analysis using a tried-and-tested process.

Threadneedle Global Select has achieved higher returns than the IA Global sector and the FTSE World benchmark over one-, three- and five-year time frames.

In the past 10 years to the end of April, the fund has returned 156.49 per cent and only narrowly beating the benchmark by 2.10 per cent while beating its peer group by 48.52 per cent.

Performance of fund vs sector and benchmark over multiple time frames

Source: FE Analytics *all figures to end April 2018

Threadneedle Global Select is the oldest of the three funds and was launched in 1997. It has an OCF of 0.85 per cent.