The PSigma Global Equity Fund, managed by Centre Asset Management’s James Abate and Jing Sun, will use GDP relative to local equity market capitalisation and GDP growth as key screens in deciding individual stock size as well as country and regional weightings.
The firm points to research showing that a GDP weighted version of the MSCI All Country World Index has produced consistently higher returns than the MSCI ACWI itself over the past seven years, with the annualised volatility of the GDP-weighted index, at 19%, comparable to that of the MSCI ACWI (18%).
Abate, who already runs the PSigma American Fund, suggests the new fund will be positioned in the gap in the middle between “me too” global equity offerings from larger firms and the “regionally biased”, more volatile global best ideas funds seen at smaller boutiques. Offerings such as Skandia Investment Group’s Global Best Ideas and Global Dynamic Equity funds, however, already use GDP-weighted benchmarks.
The fund will have an initial charge of 5.25% for retail investors, with an AMC of 1.5% and a minimum investment of £1,000. Seeded with £20m, it will hold between 80 and 100 stocks, with the intended initial top country overweights being China, Germany and Brazil.
Stocks must have a market cap of at least $3bn in order to be considered for investment. But the managers “will not just look at world equity markets today but will also ask what the world equity markets will look like a few years down the road”, according to Abate.
He and Sun cite stocks such as Apple in the US, Brazilian utility firm Sabesp and Japanese manufacturer Komatsu as representative holdings in the fund.
