The annual Morningstar Singapore Fund Awards are designed to help investors identify the retail funds and fund houses that added the most value for investors within the context of their relevant peer group in 2015 and over longer time periods.
To help our readers better observe what makes a winner fund, we asked the winning teams to shed lights on some major changes they made to the portfolio over the course of 2015, how various risks affect their investment decisions and their investment team structure, etc.
Best Global Equity Fund -- PineBridge Global Focus Equity Fund Class L
Inception Date: 7 January, 1999
Morningstar Rating (as of 2016-02-29):
Total Net Assets (Mil, as of 2016-02-29): 148.75 USD
Manager: Graeme Bencke
Manager Start Date: 1 January, 2013
M: Morningstar G: Graeme Bencke, Portfolio Manager and Head of Equity Strategy, PineBridge
M: Could you highlight any major changes you made to the portfolio over the course of 2015? Were there any particular holding(s) that drove the fund’s performance for the year?
G: The fund positioning remained reasonably steady throughout 2015 with active share and tracking error consistently at about 95% and 4% respectively. The credit goes to our sophisticated risk monitoring and management tools that assist us in constructing the portfolio to stay true to our investment forecasts.
Stock selection accounted for approximately two-thirds of the Fund’s outperformance with allocation driving the balance. Our bottom-up driven, overweight positions in Technology, Healthcare and Consumer Discretionary, as well as our relative preference for the US, also positively contributed.
Over the course of the year, we progressively took profits in each of these sectors as valuations approached our targets. We also found attractive prospects and valuations in Telecom, Consumer Staples and selected Asian stocks. This transition was also part of our deliberate shift away from expensive growth companies as we expect the Fed would continue to raise rates.
M: What is your outlook for 2016 specific to the markets you cover and how are you positioned to take advantage of opportunities and/or mitigate potential risks?
G: We remain cautiously optimistic towards equity markets despite the recent weakening of growth expectations around the globe. Valuations are reasonable and we continue to find strong investment opportunities that fit our targeted approach.
Geographically, we continue to favour the US market, although the aggregate revenue exposures of our investments are more balanced. A US-listed company, for example, may have greater dependence on the Asian markets than on domestic sales.
We are looking to incrementally add to positions in Asia, with a preference for the Chinese consumer sector. Market pessimism has discounted an overly negative outlook in our view, particularly when compared to the longer-term secular shift in demand.
Our focus also remains on powerful long-running investment themes that play across several industries, including automation, media, non-residential construction, the Internet of Things, and China’s “new” economy.
In the short term, we are aware of the heightened risks to the European markets given the concerns regarding a possible ‘Brexit’ and the on-going disruption of the migrant crisis.
M: Can you comment on the macro risks facing the global economy, including the US rate hikes, weaknesses in commodity prices and the significant headwinds facing the emerging world? How do these risks affect your investment decisions?
G: Our global multi-asset capabilities and collaborative culture are an advantage for us, as we regularly meet to debate amongst teams from different perspectives, asset classes and geographies to form investment opinions about global issues. These ongoing discussions, both formal and informal, we believe are alpha generators.
In 2015, we benefited from these by taking our sector underweight positions in Energy, Materials and Industrials as well as our regional underweight in Emerging Markets. Advanced risk management tools are key to allowing us to express these views while maintaining low volatility and turnover.
We believe the Fed will raise rates very slowly in 2016, if at all. We have reflected this view in the Fund by reducing our Energy underweight. On the other hand, our Materials underweight remains unchanged because we believe that China’s industrial output will continue to weigh on commodity prices.
China’s currency devaluation, China’s new vs. old economy and the implications of negative interest rates are among a number of macro issues that are likely to influence our investment decisions in 2016.
M: How is your investment team organized? Have there been or do you anticipate any changes to the investment team or structure over the course of the year? Do you anticipate adding to the team in the near future?
G: Our investment team is structured to maximize insights from across the globe.
This competitive advantage, which drives alpha and is formally incentivized, provides unique investment insights and allows us to uncover investment opportunities by leveraging our collective sector and company-specific knowledge.
The Global Focus team has eight dedicated members, each with sector coverage responsibility. Additionally, the Fund’s portfolio managers head PineBridge Equity Strategy and Sector Cluster Research groups. This ensures that the Fund, as well as the entirety of PineBridge, share and benefit from both top-down and bottom-up information, knowledge and opinions.
M: Can you highlight any areas where you feel that the investment team or the investment process can be improved upon?
G: We remain confident in our proven and consistent investment framework and do not foresee any significant changes in the future. However, we are constantly looking for ways to fine tune or incrementally improve different aspects such as our risk management or collaboration tools.
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