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New Brenthurst global equity fund shows its mettle

Jun 03 2019 13:39
Thought Leadership - By Brenthurst Wealth
fund management large

By Brian Butchart,  Managing Director and CFP®, Brenthurst Wealth Management

This  investment  offers  local  investors  exposure  to  global  top  index  trackers and ETFs, including Vanguard and Black Rock.

Global  politics  and  economics  have  caused  volatility  in  financial  markets  in recent  times  and  reports  of  an  expected  slowdown  have  made  investors  very nervous. During such times of turmoil and uncertainty, an effective diversified strategy  and  prudent  fund  selection  can  provide  assurance  to  manage  those nerves. 

A popular investment solution to reduce costs and provide effective diversifica- tion are index tracker- and exchange-traded funds (ETFs). An ETF is a fund which tracks  a  stock  market  index  and  trades  like  regular  stocks  on  the  exchange, whereas index funds track the performance of a benchmark index of the mar- ket.  Research  has  shown  some  passive  investment  solutions  have  surpassed some of their active counterparts in terms of capital and income growth and as a result, passive solutions have become increasingly popular.

The debate between active vs passive has been raging on for decades. The late John  Bogle,  founder  of  Vanguard,  was  the  poster  boy  for  promoting  low-cost index  funds  and  there  is  no  doubt,  based  on  historical  evidence,  that  index trackers are effective as part of a long-term portfolio to provide cost effective accessibility to multiple asset classes and markets across the world. Vanguard, one of the best-known and established passive asset managers, has been very successful in delivering long-term returns to its clients.

The greatest benefit of these types of products is they provide multi-company, industry,  country  and  tradeable  asset  class  exposure  at  a  relatively  low  cost. The range of nuances within these offerings has also expanded, including focus areas like dividend yield, volume, quality or geography, with access to multiple themes such as renewable energy, robotics or healthcare to name a few.

ETFs  and  index  trackers  are  usually  low  cost,  with significantly   lower   fees   than   those   of   actively- managed  funds.  They  are  easy  to  understand  and use,  and  investors’  expectations  are  easy  to  man- age. If you invest in a market index, you know you are  going  to  get  the  market  index  return  (less  a small  fee).  This  all  means  diversification  or  risk management  can  start  at  a  much  simpler  level. ETFs and trackers allow clients to pool their money in  order  to  allow  smaller  investors  access  to asset classes  which  may  be  difficult  to  hold  in  small denominations.

Although  passive  investing  provides  some  obvious benefits, various index funds these days give expo- sure  to  almost  anything.  This  means  that  you  still need  to  have  some  sort  of  stock-picking  strategy, which   then   is   no   longer   passive   investing.   The combination  of  a  passive  selection  of  investments then becomes an active decision.

Passive   investors   can   also   have   very   different returns,  as  there  are  multiple  indexes  that  can  be tracked  and  an  explosion  of  ETFs  to  choose  from. This  is  especially  relevant,  as  passive  investment solutions have increased significantly over the past ten years. This means the returns passive investors achieve might vary across the board, depending on which index, asset, ETF or market you are tracking.

Therefore,  skilled  active  managers  can  still  add significant value and alpha to long-term portfolios, and   be   supportive   of   an   investment  solution which  combines  both  active  and  passive  strate- gies.

There are a number of ETF and tracker funds offer- ing  a  multitude  of  investment  opportunities  and solutions   globally,   most   of   which,   such   as   the Vanguard  range  of  index  funds,  are  not  Financial Sector Conduct Authority approved. For these reasons and to further ease access to low cost    international    equity    solutions,    Brenthurst established its own fund of this nature in 2018, in association   with   Momentum   Global   Investment Management (MGIM), called the Brenthurst Global Equity Fund.

This  unique  opportunity  allows  investment  into passive  ETFs  and  trackers,  actively  managed  by Glyn Owen at MGIM.

This  fund  is  used  as  part  of  our  core  portfolio together with other passive- and actively-managed funds  to  construct  bespoke  international  invest- ment strategies. This investment offers local inves- tors exposure to the top index trackers and ETFs in the   world,   including   Vanguard,   Black   Rock   and other global giants.

It   not   only   offers   investors   exposure   to   global stock  markets  but  as  far  as  we  can  determine,  it is    the    only    FSCA-approved    international   fund investing entirely in ETFs  and trackers. The fund is the  latest  addition  to  our  range  of  funds  giving exposure to leading companies, regions, currencies and  countries  at  a  fraction  of  the  cost  of  other internationally-managed equity funds.


This  combination  of  both  passive  and  active  strategies  complements  one  another  and  potentially  offers superior long-term outcomes, as opposed to either investment strategy in isolation.

Any  investment  strategy  however  should  always  be  carefully  considered  in  consultation  with  an  advisor, who can address the risks and assess suitability to individual circumstances.

This post and content is written, sponsored and provided by Brenthurst Wealth Management. 


Thought Leadership

2019-04-04 23:27


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