Defaqto on Alliance Trust's global thematic opportunities fund

27 January 2012 5:24 pm

r Donaldson says: “This fund aims to achieve long-term capital growth primarily from investment in a portfolio of equities quoted on world stock markets. It aims to meet this objective by investing in a concentrated portfolio of global equities. The portfolio will be unconstrained by reference to global stock market indices or by market cap.

“The fund managers employ a fundamental, long-term approach to stock selection with a thematic overlay which seeks to identify macro and micro trends within global markets.

“The thematic overlay includes four frameworks – demographics, innovation, environment and global realignment. It is within these frameworks that the team identify specific themes such as healthcare, transport and  re-engineering.

“Due to the funds wide ranging investment universe its benchmark is the MSCI All Countries World Index. It is this benchmark that is the target for the fund to outperform by 2 to 4 per cent in order to trigger a 20 per cent performance fee, capped at 1.25 per cent.

“Global thematic funds are nothing new, but a review of the IMA Global sector shows only four or five funds are actually marketed as such. What differentiates this fund from the others is the managers’ conviction that their longer-term view over stock selection and a concentrated portfolio of only around 50 companies will lead to each stock providing a positive return within the portfolio.

This may be viewed as a high risk strategy, but it should result in a significantly lower turnover of stocks, which will help to improve outperformance, where other funds that take a much shorter investment horizon may see the regular turnover of stocks in the portfolio as a drain on performance.

“This fund is certainly one to watch and could easily form part of an existing global portfolio with its wide ranging market cap mandate. The performance fee may put off some retail investors but those with a significant sum to invest could make use of an additional share class for institutional investors, which does not carry a performance fee or initial charge and only charges 0.75 per cent for its annual management fee.”

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