US and Ja­pan at­tract

Finweek English Edition - - UNIT TRUSTS -

IF THERE’S ONE THEME that’s started to emerge over the past few months for South African in­vestors it’s that Ja­pan and the United States are two mar­kets that have been for­got­ten in the emerg­ing mar­ket hype. The the­ory goes that while the world has been caught up with the con­cepts of the BRICs (Brazil, Rus­sia, In­dia, China and now South Africa) stocks in the US and Ja­pan have been dis­counted, de­spite many of their heavy­weights hav­ing ex­po­sure to those high growth sec­tors.

One fund that might fit the bill for in­vestors look­ing to take ad­van­tage of this dis­con­nect in mar­kets is the Al­lan GrayOr­bis Global Eq­uity Fund, man­aged by Ian Lid­dle. The fund has 42% ex­po­sure to US eq­ui­ties, 20% to Ja­panese eq­ui­ties, 17% to Euro­pean com­pa­nies and 10% to China, giv­ing in­vestors a nice mix of de­vel­oped and emerg­ing mar­kets.

Al­lan Gray’s record as a do­mes­tic money man­ager is well re­spected, but the Or­bis Global Eq­uity fund still has some work to do to con­vince the scep­tics. Es­tab­lished in 2005, the fund has de­liv­ered a re­turn of 5,6%/year in rand terms over the past five years and 4,6% in US dol­lar terms. Man­agers might ar­gue it has still out­per­formed its own bench­mark, even af­ter the 2,38% in fees is taken into con­sid­er­a­tion. But like many of its off­shore peers the prod­uct has hardly set the world alight.

In his De­cem­ber com­men­tary, Lid­dle be­moaned poor tim­ing on ex­its of po­si­tions, adding that the fund’s poor per­for­mance could be at­trib­uted to “fewer win­ners than losers and few big win­ners over the year”.

There’s plenty of ev­i­dence to sug­gest the US and Ja­pan are smart places to in­vest in if you buy the view that an eco­nomic re­cov­ery is un­der way. Though Al­lan Gray has worked hard to build its rep­u­ta­tion as a man­ager that delivers value, with a num­ber of com­pet­i­tive of­fer­ings com­ing through in the off­shore sec­tor it’s go­ing to have to work hard to prove it can de­liver re­turns.

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