A Smart Way to Diversify Globally

03/06/2013 9:45 am EST

Focus: FUNDS

This fund combines a truly global value approach with experienced, successful management, writes the staff of Canadian Mutual Fund Advisor.

Capital International Global Equity Fund (CIPEF) has performed in the top half of the global equity category in each of the past ten years. The fund’s advisor would attribute this success to its rather unique multiple portfolio counselor system.

Capital International’s basic investment philosophy is to seek undervalued securities that it believes represent good long-term investment opportunities. The portfolio advisor uses a “bottom-up,” research-driven approach to investing that focuses primarily on individual companies, not industries or regions. Securities may be sold when the advisor’s managers believe they no longer represent good long-term value.

Plus, Capital uses a multiple portfolio counselor system that it believes provides its portfolios with natural diversification and the best combination of individualism and teamwork.

Assets of each portfolio are divided into smaller, more manageable portions that are independently managed, subject to overall guidelines. Also, a group of research analysts typically manages one portion—as much as 25% of the assets.

With Capital International Global Equity Fund, the advisor’s managers seek long-term growth of capital through investments primarily in common stocks, including growth-oriented stocks, on a global basis. Future income is a secondary objective.

Between them, Global Equity’s current managers have a total of 76 years of investment industry experience:

  • Galen Hoskin, who closely follows emerging-market consumer trends, has 18 years of experience, all at Capital
  • Carl Kawaja, a self-described “product-oriented” investor, has 24 years of experience, 20 of them with Capital
  • Dina Perry, who has a background with out-of-favor and cyclical stocks, has 34 years of experience, 20 of them with Capital

This wealth of experience has been good for the fund over time. These past ten years, for example, it has a compound annual growth rate of 4.8%, which ranks 17th among 243 funds in the global equity category. What’s more, it’s been a top-half performer in each of those years.

The fund is well-diversified. It has 39.7% of its assets invested in the US, 21.2% in Europe (ex-U.K), 9.1% in emerging markets, 7.9% in Canada, 6.7% in Japan, 4.8% in the UK, 2.5% in the Pacific Basin, and 8.1% in cash.

It’s also well-diversified by industry sector, with its largest holdings in Consumer discretionary, 21.5%; Information technology, 12.8%; Health care, 11.1%; Financials, 10.5%; and Industrials, 9.7%.

The fund’s volatility is below average in its category, as is its management expense ratio of 2.2%. Capital International Global Equity is a buy for investors seeking a core, well-diversified global equity fund.

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