Global equity returns can vary wildly from year to year due to unpredictable events. In 2022, the average IA Global fund fell 11.06% as spiralling inflation and interest rates rises, alongside geopolitical crises, sent markets tumbling. Meanwhile, the sector was up 17.68% the year before as the world emerged from Covid.
Seeing negative returns – even in the short term – can provoke anxiety among investors. For investors who don’t like to see their returns in the red, Portfolio Adviser has identified five IA Global sector funds with the best maximum drawdowns compared to the sector average of 14.5%, while also achieving top-quartile returns over a three-year period and a higher-than-sector-average Sharpe ratio. All data was gathered using FE Fundinfo.
JOHCM Global Opportunities
The £532m JOHCM Global Opportunities fund has been managed by Ben Leyland since its launch in 2012, and alongside co-manager Robert Lancastle since 2017. The strategy had 40 holdings in its portfolio at the end of October, with stakes in Philip Morris International, Henry Schein, and Sempra among its largest positions.
The fund has a maximum drawdown of 4.54%, the second best among the 467 IA Global constituents. It has also achieved top-quartile returns of 26.58% over the last three years.
VT Cantab Sustainable Global Equity
The £40.8m VT Cantab Sustainable Global Equity strategy aims to provide income and capital growth over the long term (five years plus). Run by ex-Investec manager Mark Wynne-Jones, the fund has an average of 30-35 holdings in its portfolio. It was launched in 2019 and has an OCF of 0.64%.
It pays particular attention to ESG characteristics and excludes companies involved in industries such as the production of fossil fuels, alcohol and tobacco, gambling or controversial weapons.
The fund may also invest in other transferable securities, money market instruments, deposits, cash and near cash, which it has recently utilised with an 8.8% weighting to cash and cash equivalents.
By region, it has a 48.6% weighting to North America, with Akamai Technologies (4%) and Alphabet (3.9%) making up the largest holdings in the portfolio.
Over the last three years, the fund has returned 32.11% and has a maximum drawdown of 5.38%.
Latitude Global
The £247.2m Latitude Global fund seeks to achieve strong returns throughout market cycles. Managed by Freddie Lait, the fund comes with a 1.18% OCF.
Investors would have lost just 6.14% if they had bought and sold the fund on the worst possible days in the last three years. Over that period, it has returned 29.88% – double the IA Global average.
M&G Global Strategic Value
This £328.7m value fund is run by co-managers Richard Halle, Daniel White, and Shane Kelly. The managers aim to beat the MSCI ACWI index over any five-year period, net of the 0.91% OCF. It has a max drawdown of -6.43% over the last three years.
It has returned 32.16% over three years, placing it among the top returners in the sector. Notably, the fund returned 4.41% in 2022, a year when the average fund in the sector fell 11%.
UBS FTSE RAFI Developed 1000 Index
The only passive offering in the list, the UBS FTSE RAFI Developed 1000 Index fund comprises 1,000 large, medium and small companies in developed markets, selected and weighted using a composite of factors including total cash dividends, free cash flow, total sales and book equity value.
It is managed on a day-to-day basis by Stuart Newman, senior portfolio manager within the UBS indexing team, and charges 0.25%. The fund has returned 37.73% over three years, while its maximum drawdown over that period is 6.60%.
