Expanding investment horizons globally

WITH underwhelming economic growth, a possible impending downgrade, political uncertainty and rand volatility, it may be an opportune time for an international investment in a fund that is well diversified across various regions, asset classes, sectors and currencies.

The PPS Global Balanced Fund of Funds, offered by PPS Investments, is a global multi asset fund of funds that gives investors exposure to global equities and fixed income markets via selected skilled foreign asset managers.

It is an actively managed fund of funds that exclusively invests with well-established international managers with proven long term track records.

“Unlike the South African market, which has a limited number of manager strategies and available pool of assets, the global market in contrast has a bewildering number of investment managers and individual securities to invest in,” says David Crosoer, Executive of Research and Investments at PPS Investments.

This fund optimally combines a group of managers who are able to use their expertise to find the stand-out opportunities in this global universe.

“The fund of funds structure does not limit us to South African asset managers, but allows us to invest with outstanding asset managers based in jurisdictions around the world. These managers are not skewed to, or limited by specific sectors within South Africa,” says Crosoer.

The fund of funds has been constructed to favour managers characterised by investment approaches centred on high-conviction ideas.

“This combination of managers in the fund is well suited to take advantage of the global opportunity set available to investors.

“It also allows us to benefit from the varying skills of complementary underlying managers. Such managers can behave quite differently from each other and their benchmarks, and because we’ve been deliberate about investing with managers that employ different strategies, we expect this optimal manager combination to deliver more consistent returns over time,” says Crosoer.

Each of the managers has an exceptional track record, compared to respective peer groups, and typically has a significant stake in their own business.

“We have tried to find managers that have shown a willingness to back their own well researched ideas, and anticipate that their portfolios will look and perform differently from each other and the major indices at times,” he says.

The fund uses two global equity managers, two global balanced managers, a global index tracker and a global property manager.

The global equity managers Egerton and Veritas both have a focus on quality and hold fairly concentrated portfolios of be tween 30 and 40 stocks, while the global balanced manager Orbis brings a bottom up and Ruffer a top down approach to portfolio construction.

These four managers’ strategies are complemented with an allocation to a global property and global equity tracker portfolio. Catalyst is responsible for managing the global property fund.

The PPS Global Balanced Fund of Funds has been constructed to generally have a minimum equity allocation (excluding property) of 60 per cent and an allowance to hold up to 75 per cent.

This allocation is consistent with that of a traditional offshore balanced fund, although the fund may and will at times have up to 90 per cent in growth assets such as equity and property.

From a building block scenario this fund of funds can be used in combination with a local portfolio for a Reg. 28 solution or as a standalone fund, explains Crosoer.

“We believe this fund of funds is well placed to help South Africans diversify into international assets, with the uncertain road ahead,” concludes Crosoer.