Description
A global portfolio of public equities remains at the core of our multi-asset class allocation, providing our clients with exposure to returns tied to global economic growth. We define the asset class to include both long-only and long-short strategies, independent of their overall levels of market exposure. We believe that it is possible to outperform global equity markets over time by identifying and partnering with exceptional investment organisations, building portfolios that provide diversified exposure to different active risks, and leaning into areas of the market that we consider to be most attractive for generating excess returns. Our equities allocations are expressed through a combination of low-cost passive exposures, derivatives, directly held securities and active managers.
How We Invest
The majority of active equity investors do not deliver persistent outperformance net of their fees, so we are focused on finding exceptional managers that do have the potential to persistently outperform in the future. In this pursuit, we have a bias towards independent and owner-operated managers who have built investment organisations that thoughtfully align their fees and internal incentive structures with the interests of their investors. We believe that sustainable performance is rooted in a repeatable investment process and look for managers where we can evidence both the sophistication of their investment process as well as the firm’s rigour in applying it. We believe that these characteristics can be found in managers of different sizes, styles and areas of focus. However, we do believe that specialisation can be a key source of competitive advantage and that some areas of global equity markets lend themselves better to outperformance being generated by managers with differentiated domain expertise. We therefore seek to combine allocations to what we consider to be exceptional fundamental stock pickers that invest across regions and sectors with diversified quantitative strategies and sector and regional specialists.
Our best ideas in equities are expressed through two of our discretionary multi-manager pooled vehicles. The first focuses on long-short equities and is a portfolio of the most talented asset managers who deliver alpha on both the long and short side of the portfolio across both generalist and sector/geographic specialists. The second portfolio targets a risk level similar to global equity markets and focuses primarily on long-only managers. It has the ability to allocate to managers with longer duration capital structures and investment strategies. Investment managers in this portfolio seek to generate outperformance by taking a longer-term view on changing company or industry dynamics. In some cases they may also look to catalyse changes within companies by actively engaging with management teams.
