Barney Goodchild, Francois De Bruin and Richard Saldanha set out the thought process behind our Global Equity Endurance strategy.
A quick scan of marketing collateral for most investment products will generally point to a goal of outperforming a reference index with similar or lower levels of risk. However, the reality is that only a few global equity products have consistently delivered on the return side of the equation.
Certain strategies, such as those with a value or growth bias, can be expected to have a natural cyclicality to their returns. However, for funds marketed as having an all-weather approach (such as those included in the Morningstar Large Cap Blend peer group), investors would expect more consistency.
Looking at rolling three-year excess returns for the peer group between 2017-2022, only 13 out of a total sample size of 110 funds consistently generated a positive excess return.
So, why is consistent outperformance elusive for most managers? In Five principles for performance persistence, we answer this question and explain how our Global Equity Endurance strategy seeks to retain its membership as part of the elite group of evergreen strategies delivering persistent outperformance, highlighting:
- Why investors should focus on both relative and absolute risk
- Why an overemphasis on diversification, ‘quality’ and short-termism are pitfalls investors should avoid
- The five principles underpinning our approach