Pendal launches US$5 billion global strategy in Australia
Pendal Group Limited announced the group’s global equities strategy, the Global Select Fund managed by Chris Lees and Nudgem Richyal, has launched in Australia and is now available to investors.
Global Select is one of the group’s most successful investment strategies and is currently offered overseas by Pendal’s UK-based asset manager, J O Hambro Capital Management (JOHCM). The team manages US$20 billion across its product suite and US$5.3 billion in the Global Select Strategy, as of 31 August 2021.
The fund provides an “alternative way to the summit”, according to Lees. Unlike many other global equity funds, the portfolio has not recently held the major “FAANG” tech stocks but has still managed to deliver strong levels of outperformance.
The fund’s distinctive approach looks to the future leaders in the global equities sector, with a portfolio of 30 to 60 stocks that are mainly centred around long-term compounders, stocks in early-stage growth, or those undergoing transformation or recovery.
Lees and Richyal use a four-dimensional, “quantamental” investment process of stocks, sectors, countries and time/change, combining the advantages of quantitative and fundamental research. The fund focuses on the behaviour of each share price to determine the most important driver of each prospective investment.
It also highlights underperformers, prevents the concentration of risk and provides greater exposure to midcap stocks which can enhance returns over the long term.
“Equity markets are like real estate, you don’t buy a good house in a deteriorating suburb,” Lees said.
“Essentially, we look for stocks we like in good or up and coming ‘neighbourhoods’ – economies, sectors, industries. Neighbourhoods are screened for valuation, fundamentals, momentum to identify if they are improving or deteriorating.”
“Our equal weighting method enables us to take a systematic approach, avoiding human biases and systematically weeding out losers, which has proven a major driver of returns for the fund over the years.”
The fund’s strategy has a 17-year track record of outperformance based on a proven process, operating in the top-decile performance in Lipper and second decile in Morningstar.
“We’ve delivered top-quartile investment returns in the last 20 years without holding the mega caps. By performing without owning the same stocks that are likely already in most global portfolios gives clients the opportunity to ‘zig’ when other strategies ‘zag’, to provide more consistent overall performance,” Lees said.