Fundamental approach might be a better bet than global value ETFs: Martin Currie

Oksana Patron

23 November 2022

The fundamental and high conviction approach, focused on Australian equities, might be a “tastier dish” than global value exchange trade funds (ETFs) that investors have been recently adding to their portfolios, according to active Aussie equity fund manager, Martin Currie.

Reece Birtles, chief investment officer, Martin Currie Australia, said the analysis compared its Select Opportunities Fund, and as proxies for ETFs, the naïve Value indices MSCI Australia Value and MSCI Global Value relative returns against their respective broader geographic benchmarks.

“Since the value style rebound started two years ago, we have seen the Martin Currie Select Opportunities Fund deliver, after fees, almost as much value alpha as the MSCI Australia index. Both delivered more than the MSCI Global Value index, noting that the indices are presented gross of fee,” Bristle said.

According to him, this result was consistent with some structural themes in Australia, such as higher exposure to resources, financials and real assets, and is short on growth sectors such as tech, less geographic value trap-like risk, and the fact that Australia growth-style stock valuations were crowded into a few low-quality names (by global FAANG standards).

“Within this value-positive environment, we believe that the Martin Currie Select Opportunities Fund is able to perform better than a ‘naïve Value’ index approach on an ongoing basis due to several fundamental ingredients,” Bristle said.

“Our stock selection, driven by our proprietary fundamental analysis, is positioned to benefit from the continuation of the market’s rotation from growth to value. Our Australian focus provides investors with the opportunity to benefit from Australia’s geographic advantage within this thematic environment.”