Best International Share Funds

GOLD WINNERS ARROWSTREET AND MAGELLAN

These funds have made the most of the many growth opportunities overseas

Many overseas markets turned in much better performances than the local market over the past 12 months, resulting in strong one-year returns for all the international funds in the winners’ circle.

Joint winners three years in a row are Arrowstreet Global Equity and Magellan Global. Arrowstreet Global Equity gives investors exposure to a diverse collection of international stocks, including emerging markets and small caps. It uses an active, quantitative investment approach, looking to consistently outperform the benchmark through varying market conditions.

“This strategy can swing portfolio exposures around quite substantially and at short notice,” says Morningstar analyst Elliot Lucas. “High turnover and the need to time the entry and exit of positions appropriately is a more important factor for Arrowstreet’s success than most other global equity strategies,” he says. “The strategy is expensive compared with other options. Despite this, Arrowstreet Global Equity’s differentiated approach and excellent team make it a standout option for global equities exposure.”

Fellow Morningstar analyst Michael Malseed says Magellan

Global ignores index weightings when building its concentrated portfolio of 20 to 40 companies. Historically the portfolio has been tilted towards consumer-related sectors while steering clear of commodities, Malseed says. But positioning has evolved

with a move away from expensive defensives to technology from 2013 to 2016.

“The portfolio’s changing sector composition reflects that manager’s view on long-term market trend. Magellan Global remains one of our top picks because of its quality-focused, high-conviction, risk-aware approach. For Australia-based investors seeking exposure to global equities, we think it remains an excellent option.” Antipodes Global Fund

Class P came second. It also has a highly concentrated portfolio of 30 to 60 stocks, focusing on cyclical and structural factors.

“Investors should be aware of the portfolio’s concentrated nature, shorting and currency positions that may result in heightened stock, sector and geographic-specific risks and volatility,” says Morningstar analyst Ross MacMillan. Given this, Morningstar suggests limiting an allocation to one-third of an overall global equities exposure.

“Overall, Antipodes Global (long short) has solid features and we are confident it will reward investors in the future,” says MacMillan.