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2018 Best Global Equity Fund Winner Q&A - GS Global CORE Equity Portfolio Base Acc USD (Close)

To help our readers better observe what makes a fund a winner fund, we sent out questionnaires to the winning fund teams earlier and asked them to shed lights on their team structure, how various risks have affected their investment decisions, and the major portfolio changes over last year, etc. 

Nelly Poon 03/05/18

Category Winner: Best Global Equity Fund - GS Global CORE Equity Portfolio Base Acc USD (Close)

Key Stats
Inception Date: 2005-11-21
Total Net Assets (Mil) (2018-04-30): USD 4,559.61 
Manager: Len Ioffe, William J. Fallon, James Park, Takashi Suwabe, Osman Ali 

M: Morningstar G: Goldman Sachs 

M: Can you highlight any major changes you made to the portfolio over the course of 2017? Were there any particular holding(s) that drove the fund’s performance for the year?

G: The result of our research and investment process produces return forecasts on every stock in our investible universe. These forecasts are then used to develop efficient, alpha seeking, target portfolios while considering liquidity, transaction costs, risk and any client specific restrictions. We continuously improve our model by updating it 2-4 times per year and incorporating the enhancements into our process.

M: What is your outlook for 2018 specific to the markets you cover, and how are you positioned to take advantage of opportunities and/or mitigate potential risks?

G: We never take any market for granted and apply a rigorous evaluation process to uncover potentially attractive opportunities at any moment. We are seeing good performance so far this year in our European and US stock picks despite the increased volatility and uncertainty. We rely on our consistent investment philosophy and time-tested stock-selection approach to guide us through 2018.

M: Can you comment on the major risks facing financial markets, such as rising US rates and elevated asset prices? How do these risks affect your investment decisions?

G: We believe 2018 will present its own set of challenges. We believe that in order to effectively manage portfolio risk  and successfully generate alpha , the portfolio optimizer should recognise the risks associated with any over- or underweight positions and be able to respond quickly to changing market conditions. To meet this objective, we have developed our own proprietary risk model which we believe allows us to better measure and manage portfolio risk than we could do with those commercially available models that are widely used. We update our risk model with daily data and place higher weight on the most recent information to better capture the changing risks in the market. We have dedicated significant resources to develop our risk model and believe it gives us an innovative competitive advantage in portfolio management.

M: How is your investment team organized? Have there been any changes to the investment team or structure over the past year? Do you anticipate adding to the team in the near future?

G: The Global CORE® Equity Portfolio is managed by the Equity Alpha Strategies team within GSAM’s Quantitative Investment Strategies (QIS) platform.

Our Senior Portfolio Managers oversee all aspects of their product areas from research to implementation and are ultimately responsible for supervising and monitoring the process, implementation, and controls. They are supported by teams throughout the functional areas.

During 2017, two Vice presidents joined the Equity Alpha team, while one Vice President left the team.  We plan for staff additions as business needs dictate, so that we are always well-positioned to service our clients.

M: Can you highlight any areas where you feel that the investment team or the investment process can be improved upon?

G: We are susceptible to drawbacks that quantitative portfolio managers face across the industry. We believe the biggest potential drawback of the quantitative approach is that, in order for the approach to be successful, historical relations must continue in the future. This is why we focus on factors that have strong theoretical support and consistent results in many different markets environments. We also use multiple, diversified factors to minimize any damage that might occur if any one factor stops working. Finally, we maintain an active research agenda to uncover new factors and improve existing ones.

1Source: GSAM.
2Source: GSAM. Past performance does not guarantee future results, which may vary.
3Source: GSAM. The economic and market forecasts presented herein are for informational purposes as of the date of this presentation. There can be no assurance that the forecasts will be achieved.  Please see additional disclosures at the end of this presentation. There is no guarantee that these objectives will be met
4Source: GSAM. The economic and market forecasts presented herein are for informational purposes as of the date of this presentation. There can be no assurance that the forecasts will be achieved.  Please see additional disclosures at the end of this presentation.

View all Morningstar Singapore Fund Awards 2018 articles here.


About Author Nelly Poon

Nelly Poon  

Nelly Poon is an editor with Morningstar.