Navigating The World Of Global Investing: Pros, Cons, And Five Picks For Investors
UK investors appear to love global funds. In fact, they have more invested in IA Global than any other sector – even IA UK All Companies*. But why is this area so popular? What companies do they invest in and what do you need to know before committing your money?
Here we take a look at the pros and cons of investing in global funds and suggest five interesting portfolios that we believe are worth considering.
What Are Global Funds?
As the name suggests, global funds can scour the world for the most exciting investment opportunities they can find. This obviously makes a lot of sense as no one particular country or sector has the monopoly when it comes to great companies. Of course, the types of stocks these fund managers will buy depends on the portfolio’s stated objectives and any restrictions it must follow.
Pros And Cons
The main positive is a diversified spread of investments. Global fund managers will have a much larger investable universe than those concentrating on individual countries. Of course, there are always potential downsides. There are no guarantees when it comes to investing so you should only invest what you can afford to lose. For example, a global fund may choose to be very heavily weighted in certain sectors, making them susceptible to problems in these areas.
Where Can You Find Global Funds?
The IA Global sector is home to portfolios that must invest at least 80% of their assets globally in equities – and must be diversified by geographic region.
The good news is there’s no shortage of potential funds. In fact, the toughest task will be comparing the various investment objectives and making a decision. For example, funds that focus on household name multinationals will sit alongside those that concentrate on developing markets. This makes thorough research essential.
How To Choose Your Fund?
Decide which parts of the world you’d like exposure to and then search for a fund that most closely fits your objectives. As always, paying close attention to the track record of the manager is critical. Look at how long have they run the fund and how they’ve performed over various time periods. To help in your search, we have selected five funds from within the IA Global sector, all of which have different investment aims and objectives.
abrdn SICAV I Global Mid Cap Equity
The aim is to achieve a combination of growth and income by investing in mid-cap companies that are listed on global stock exchanges. It also considers those in the emerging markets. The fund’s investment process is based around abrdn’s ‘Matrix’ screening tool, which previous co-manager Harry Nimmo helped created. It looks for quality, growth and momentum factors. We see the mid-cap space as a growing segment in which relatively few funds are invested. The presence of this fund, therefore, is attractive. For pure exposure to a quality growth portfolio of medium-sized companies, we believe this is a very competitive option.
T. Rowe Price Global Focused Growth Equity
David Eiswert, the fund’s manager, invests in a diversified selection of global companies with the potential for above average and sustainable rates of earnings growth. His approach taps into the best ideas of analysts that he builds into a portfolio that can deliver long term returns across all market conditions. We like the impressive strength and depth of the research team. Such resources should help this fund capture the growth style from the vast universe. Amazon, Microsoft, Nvidia and Apple are among the companies it favours, with almost 65% of assets based in US stocks**.
BlackRock Global Unconstrained Equity
This is a concentrated, high conviction fund that targets extraordinary companies across developed markets, despite having a global mandate. The stated aim is to provide a return through the increase in value of assets over the long-term. It classes this as being at least five years. Although the fund has only been running since early 2020, but we like the fact it’s guided by two top performing managers in Alister Hibbert and Michael Constantis. Their philosophy is built around the idea that the market has become increasingly focused on short-term returns, which provides opportunities for long-term investors.
Morgan Stanley Global Brands
Microsoft, Accenture, Visa, Philip Morris International and Reckitt Benckiser are among the companies held** by the investment team running this fund. The aim is to grow investments over five to 10 years by investing in high quality companies built on dominant market positions and underpinned by powerful intangible assets. We like the high level of concentration of this fund as it only has 25-30 holdings, with more than half of its assets in the top ten names**. This demonstrates conviction from the managers and is a good example of how active management can really add value.
Lazard Global Equity Franchise
Companies demonstrating a business edge will be favoured by this fund’s four strong management team of Matthew Landy, John Mulquiney, Bertrand Cliquet and Warryn Robertson. These industry leaders can operate in any sector across the world, although the quartet has a natural bias towards larger companies. This explains why its largest holdings include National Grid, eBay, Omnicom and CVS Health**. The team have an excellent track record with this process on another fund and we believe it offers a very complementary offering in the global equities space.
*Source: Investment Association, February 2024
**Source: fund factsheet, 29 February 2024
Past performance is not a reliable guide to future returns. You may not get back the amount originally invested, and tax rules can change over time. The views expressed are those of the author and fund managers and do not constitute financial advice.
