The Global Equity Approach

“The emergence of new economic superpowers from the developing world is also making investors take notice of the importance of a global approach.”

By Safa Muhtaseb,  CFA, Portfolio Manager

The tradition of separating US and International equity portfolios has faced substantial challenges, leaving many investors wondering about the practice of following a strict ‘style box’ approach. Many investors are questioning why they should limit their range of investment choices and reduce their alternatives at a time when the opportunities are broader than ever?

A global equity approach, by contrast, enables the investment manager to cross borders between emerging and developed countries and across market capitalization ranges. It also facilitates analysis and comparisons between companies in similar sectors around the globe, contributing to more astute decision-making. The move toward global equity mandates in the U.S. has started to build over the last decade. Recently, institutional investors have embarked on a major shift toward global equity mandates and individual investor interest appears to be accelerating.

Our Global Equity Philosophy

Global Currents’ approach is on the leading edge of ‘unconstrained’ portfolio strategies that do not strictly adhere to the ‘benchmark-related style box’ investing of the past — as well as other criteria. Our global equity approach provides diversification across domestic and foreign markets and assists today’s institutional and retail clients in avoiding concentrating their assets in their home market.

Our investment team has broad-based experience in global equities, which has been gained by managing global value equity strategies for over fifteen years. A team approach is the hallmark of our consistent performance in this asset class. Through a rigorous research process, stocks are viewed at a global level so that comparisons can be made with similar companies in the same industry or sector to determine their attractiveness — giving the investment team a truly global perspective. Global Currents has significant capacity in both its Global Equity and International Value Equity portfolios to address the institutional and retail shift in demand — both today and in the future. The firm is well positioned to benefit as investor’s shift asset allocations away from their home markets and redeploy assets globally.

Active Global Investing

Global Currents takes an active stock picking approach to search out potential investment opportunities, no matter where they are in the world. To be successful, the investment team concentrates on a bottom-up analysis that uses cutting edge quantitative systems to filter the investment universe, before conducting in-depth fundamental company research into likely portfolio candidates.

The investment team takes a focused approach to global investing; typically the portfolio will hold between 50 to 100 stocks. The team utilizes its in-depth knowledge of companies acquired through years of experience to invest with conviction and deliver on its aim of providing superior levels of outperformance to investors.

The portfolio is also free of onerous investment restrictions related to company market capitalization, allowing investment in stocks of all sizes. Flexibility is applied across all geography; the portfolio is comprised of undervalued stocks without regard to geographical location. Portfolio managers can also seek to exploit opportunities by exposing the portfolio to emerging market equities.

Our global equity approach benefits from the following key attributes:

• Experienced and stable investment team
• Global research perspective
• Clear investment philosophy
• Active, bottom-up approach to stock selection
• Country allocation is the result of stock selection

Case for Global Equity

A look at performance of domestic and foreign equity markets over long time periods clearly demonstrates the rationale for investing globally. Investing in foreign equities has typically allowed clients to diversify risk and position their portfolios for greater potential return. Limiting investments to only your ‘home’ market limits the range of possibilities for your portfolio. By investing globally, portfolio managers can expand the opportunity set and increase the chances of finding good investments.

In the twenty first century, more and more companies are becoming ‘global’ organizations in terms of geography, customers, suppliers or the relevant marketplace. Investment management research and evaluation currently can view a company on a ‘global’ basis — allowing for comparison across an industry and the world — to best determine whether an investment makes sense on a ‘global’ basis. Ultimately, by factoring in an integrating global economy, clients can best position their portfolios to capture opportunities across the globe, wherever they may be found.