Consistency and quality are key
The Investec Global Opportunity Equity Fund of Funds invests in a number of global equity funds and aims to deliver a total return, or rather income and capital growth. Stock selection in the underlying foreign-domiciled Investec GSF Global Franchise Fund
Fund manager insights
The fund’s performance over the past 12 months could be ascribed to it avoiding energy and resource stocks, from a sector perspective, and emerging markets, from a geographic perspective, according to Clyde Rossouw, portfolio manager.
“Furthermore, the global economic environment is such that the markets are not seeing much topline growth, and limited pricing power, in several industries,” he says. “We invest in businesses that are in attractive industries and have price leadership.”
The portfolio is a “rather concentrated one” with about 25 to 40 stocks, explains Rossouw, with names that are likely to produce consistent and quality outcomes.
“We invest in companies that can create their own fortunes, and avoid stocks that are heavily exposed to economic momentum and market sentiment,” he says.
The fund lists three of the world’s largest tobacco companies among its top 10 holdings. Tobacco businesses face limited competition, have true pricing power through excise tax regimes globally and, despite being highly regulated, produce strong free cash flows, he explains.
Another dominant player among the fund’s top picks is Anheuser-Busch InBev, the world’s largest brewer.
“ABInBev is an industry dominator, which, following the deal with SABMiller, will dominate the global landscape in attractive geographies,” Rossouw says.
The fund has material exposure to the consumer staples sector, while it is also seeing some attractive opportunities in information technology and healthcare, he adds. “We are reluctant to invest in some of the more capital-intensive parts of the market and we have no interest in highly leveraged companies,” he says.
“Therefore we are still avoiding most financial services companies, along with mining companies and utilities.”
Why finweek would consider adding it
The fund is skewed towards quality dominant players in different industries that tend to ride out any economic downturn.
As Rossouw explains, the fund steers clear of capital-intensive parts of the market, which may include mining companies. When companies use their cash flow to buy back shares or pay out consistent dividends, they typically stay away from large capital investments.
The fund being an offshore portfolio makes it a solid hedge against the rand’s weakness.
The portfolio is a “rather concentrated one” with about 25 to 40 stocks.