Type: Unit trust
Aim: Growth and income by investing globally in blue chip companies in developed and developing markets
Minimum investment: Lump sum £1,000
Investment split: 39.98% Europe including the UK, 30.3% the Americas, 25.71% Pacific Rim, Middle East/Africa 1.88%
Isa link: Yes
Charges: Initial 5.25%, annual 1.5%
Commission: Initial 3%, renewal 0.5%
Tel: 020 7925 3172
This fund aims for growth and income by investing in a portfolio of 80 to 100 stocks global blue-chip stocks. It will be managed for PSigma by James Abate and Jing Sun from New York based firm Centre Asset Management.
Putting this product in to its market context Hargreaves Lansdown’s Richard Troue says: “As globalisation continues to blur the distinction between developed and developing economies, investors are increasingly thinking internationally. This is also being seen at a company level, with those in the developed world investing more in emerging markets and vice versa.
Troue believes a global fund can provide a way to capitalise on this trend and also add an element of diversification to a portfolio.
“Interestingly, rather than focusing on the world’s largest stock markets the managers will place greater emphasis on countries with higher GDP growth. China instantly springs to mind and this is likely to be the largest overweight position in the portfolio. However, while much focus has been on the travails of the European periphery, the Germany export machine has powered ahead, boosted by a weaker Euro and strong emerging market demand and this will also be a key overweight position.”
Troue adds that the US will be a significant underweight position at around 22 per cent of the portfolio compared with 43 per cent of the MSCI World index.
Discussing the fund’s investment process Troue says: “A top down GDP focused overlay will be combined with bottom-up stock picking. The managers will focus on what they term wealth creators – companies using capital to generate a higher return than the original cost of borrowing.
“These are blue-chip growth companies that have a strong market position, are investing in research and development, and growing their brands).”
Troue adds that the managers will also focus on wise contractors – companies that cannot achieve a return on capital in excess of the cost of borrowing, but which are paying down debt and returning capital to shareholders. “In simple terms, these companies are recognising their business is not wisely reinvesting capital and are realising wise contraction – or shrinking – is a better bet.”
Turning to the potential drawbacks of the fund Troue says: “Both managers have a reasonable amount of experience but they have not worked together for long. There is little doubt they are taking a slightly more innovative approach with this fund, similar to that used on the PSigma American growth fund.” Troue feels this approach is unproven on a wider mandate and like to see how the duo fares before considering this fund a buy.
Identifying the main competition Troue says: “Investors aren’t short of choice in the global space. However, many of my favourite funds are currently more skewed towards indirect exposure to emerging markets through companies listed in developed markets. So in this respect the PSigma fund is setting itself apart from the competition with a greater focus on direct exposure to emerging markets.”
Troue believes that where investors are looking for a global fund with a good smattering of direct emerging market exposure, he would favour Neptune Global Equity.
“For something a bit different, and slightly more adventurous, investors might consider the JM Finn global opportunities fund. Anthony Eaton, the manager, has recently trimmed commodity exposure in favour of global consumer brands benefiting from globalisation and increasing demand.”
Suitability to market: Good
Investment strategy: Good
Adviser remuneration: Average