Category Winner: Best Global Equity Fund - Investec GSF Global Strategic Equity Fund – A Acc USD
Inception Date: 2007-6-29
Total Net Assets (Mil) (2018-03-27): USD 1,830.23
Manager: Mark H. Breedon
M: Morningstar I: Investec
M: What is your outlook for 2018 specific to the markets you cover, and how are you positioned to take advantage of opportunities and/or mitigate potential risks?
I: Following a year of outstanding equity returns it would be tempting to call an end – or at least a pause – in the market rally. While the perceived high market valuations have pushed many commentators to make this call recently, experience suggests that valuation levels rarely herald a market decline.
Also, as bull markets approach maturity, the value factor typically leads the way. Despite the long duration of the current rally, this has patently not been the case. The value factor remains particularly cheap – both relative to the market and historical averages – despite the value end of the market experiencing better than average earnings revisions. This anomaly has seen our client portfolios generally demonstrate a clear valuation discount to the market averages, but with a higher growth profile than the broader market while also exhibiting a stronger balance sheet structure. We suggest that the strong positive investment flows into index based ETF’s and outflows from traditional actively managed mutual funds has enabled us to construct portfolios that demonstrate these positive characteristics.
With a relatively benign growth background, we consider that 2018 should prove another good year (geopolitical shocks notwithstanding) for our bottom-up investment process.
M: Can you comment on the major risks facing financial markets, such as rising US rates and elevated asset prices? How do these risks affect your investment decisions?
I: The normal catalyst for a downturn is central banks tightening monetary policy in the face of fears around accelerating inflation, yet it is hard to foresee any real near-term effort by the monetary authorities to rein in inflationary growth through higher interest rates. At the same time, the International Monetary Fund is forecasting a small acceleration in economic growth in 2018, which suggests that the probability of a recession remains low, especially since many economic indicators have begun to beat expectations again.
M: What do you think are the success factors in your corporate culture than enables your firm to consistently deliver for investors?
I: The dedication and loyalty of our staff have proven to be a strong enabler for us to maintain our performance and our high standard of client work delivery. At the heart of this culture is ‘the freedom to create’ – we believe people work best when they’re free to pursue and express their conviction. This approach attracts dynamic individuals – original spirits who want to pursue their passions and interests. Such personalities thrive in a non-hierarchical workplace, so we give that to them. We encourage honesty and discussion, and we organise and empower our teams to inspire diversity of perspective. Having the right people look after our clients works seamlessly with our global growth objective. In the words of our Chief Executive Officer Hendrik du Toit – “it's all about the interests of our clients and achieving the investment returns they require”.
M: Are there plans to further strengthen your investment team? In which areas?
I: The region is strategically very important to us as such we are continually evaluating and implementing appointments that aim at significantly strengthening Investec’s investment capabilities in the region, and further enhances our existing network among Asian markets. Among these arrangements include the relocation of a few of our highly experienced fund managers to Hong Kong to oversee our expanded business in this part of the world. This compliments our already established investment team in Singapore, ensuring a comprehensive coverage of the two economic hubs of Asia.
View all Morningstar Hong Kong Fund Awards 2018 articles here.