Experience and a pragmatic approach are the critical factors in boosting relative performance for global equity managers according to the latest analysis of offshore based funds, published by Standard & Poor’s Fund Research. In the current bear market, few global equities fund managers have experienced such a protracted recession. Long term investment experience has therefore become a valuable quality for strong relative performance.
One strategy that has served those managers with considerable investment experience well is their willingness to seek added value by allocating some of their assets into cash or short term bonds. Another strategy that has reaped good results is an increase in portfolio exposure to small cap stocks, which have outperformed their larger adversaries over the last three years, says S&P.
Sector positioning has become a less important then it was a year ago as the margin of performance differentials between industrial sectors has closed.
Among the managers interviewed for the latest research who have been looking closely at absolute returns, there is general agreement that a reasonable balanced has been struck between upside potential and downside risk. For strategy in the current climate, most were focusing on astute stockpicking believing that there was far less opportunity to add value through geographical and sector bias.