UK investors have shown a strong inclination towards global funds, with IA Global standing out as the most favored sector, surpassing even IA UK All Companies*. This raises the question: what makes global funds so appealing, and what considerations should you take into account before making your investment?
Here, we delve into the advantages and drawbacks of global funds, explore the companies typically included in these portfolios, and present five compelling options for prospective investors.
Understanding Global Funds
Global funds have the flexibility to explore investment opportunities worldwide, transcending geographical boundaries in pursuit of promising ventures. This diversified approach acknowledges that excellence in business is not confined to any single country or industry. The specific stocks included in a global fund’s portfolio will align with its stated objectives and regulatory constraints.
Pros and Cons of Global Funds
The primary benefit of global funds lies in their broad spectrum of investments, offering exposure to a wide range of opportunities unlike funds focused solely on individual countries. However, investing always carries risks, and it is prudent to allocate funds cautiously. Some global funds may exhibit heavy exposure to specific sectors, rendering them vulnerable to sector-specific challenges.
Finding Global Funds
The IA Global sector hosts funds mandated to allocate a minimum of 80% of their assets globally in equities while maintaining geographic diversification. Fortunately, there is no shortage of options in this sector, making it essential to conduct thorough research to align your investment objectives with the fund’s focus, whether on multinational corporations or emerging markets.
Choosing the Right Fund
When selecting a global fund, consider your desired geographical exposure and seek a fund that aligns with your investment goals. Evaluating a fund manager’s track record is crucial, assessing their performance over various periods. To aid in your search, we have identified five standout funds within the IA Global sector, each with distinct investment objectives.
abrdn SICAV I Global Mid Cap Equity
Designed to blend growth and income, this fund targets mid-cap companies listed on global stock exchanges, including emerging markets. Utilizing abrdn’s ‘Matrix’ screening tool, the fund emphasizes quality, growth, and momentum criteria. With a focus on medium-sized companies, this fund presents a competitive option for quality growth exposure.
T. Rowe Price Global Focused Growth Equity
Managed by David Eiswert, this fund invests in a diverse array of global companies poised for above-average and sustainable earnings growth. Backed by a robust research team, the fund aims to deliver long-term returns across market conditions, with a significant allocation to US stocks, including major players like Amazon and Microsoft.
BlackRock Global Unconstrained Equity
This high-conviction fund targets outstanding companies across developed markets globally, emphasizing long-term value appreciation. Guided by seasoned managers Alister Hibbert and Michael Constantis, the fund leverages opportunities arising from the market’s short-term focus on maximizing returns.
Morgan Stanley Global Brands
Focused on high-quality companies with dominant market presence and strong intangible assets, this fund aims for growth over a 5-10 year horizon. With a concentrated portfolio and top holdings including Microsoft and Visa, this fund showcases active management’s potential to add substantial value.
Lazard Global Equity Franchise
Managed by a seasoned team, this fund seeks companies with distinctive competitive advantages across various sectors globally, favoring larger enterprises like National Grid and eBay. Known for their expertise and track record, the team offers a complementary option in the global equities landscape.
*Source: Investment Association, February 2024
**Source: fund factsheet, 29 February 2024
Note: Past performance does not guarantee future returns. Investment returns are subject to market fluctuations and tax regulations may change. The opinions expressed are those of the author and fund managers and do not constitute financial advice.
