Global Leaders Portfolio Strategy

A concentrated portfolio of developed market equities

Offshore Segregated Services

 

Investec Wealth & Investment (W&I) is one of South Africa’s leading providers of tailored investments for high net worth individuals.

W&I offers managed and advisory services in both South Africa (SA) and the United Kingdom (UK) and the research and investment skills across the Group are employed to offer our clients the opportunity to invest in offshore segregated services.

These services enable a South African investor to access offshore investments that have been carefully selected by the investment manager in SA, in conjunction with the expertise provided by the research team and investment managers in the UK.

Global Leaders Portfolio Strategy

The Global Leaders Portfolio (GLP) strategy is a discretionary managed segregated portfolio invested in equities, primarily offered to international and high net-worth clients looking for a concentrated portfolio of developed market global equities as part of their overall investment strategy. GLP adopts a capital growth approach to investing and it should be understood that this service does entail material risk of capital loss.
Our disciplined process blends investment art with science. Decisions are made by an experienced team of investment managers and researchers, drawing on the resources and expertise of W&I in both SA and the UK.
Diversification is used to build a sound portfolio of equities across regions and sectors, quoted on stock markets in the developed world. The portfolio is managed actively in the sense that it will differ markedly from the benchmark, but since our focus is on high quality investments whose value compounds over time with superior retained earnings, turnover will be low. This long-term buy and hold strategy also minimises the number of transactions on the portfolio, helping to control costs, which is an important element in targeting positive returns.

Key Facts

Mandate type

Segregated, discretionary managed

Minimum investment

investment $300,000

Management fee

1.50% on the first $1m

1.25% thereafter

(subject to a minimum annual fee of $3,000)

Benchmark

MSCI World Index total return

Risk profile

High

Fees and Charges

 

An annual ‘all-inclusive’ fee charged for this strategy is calculated on the value of your portfolio as follows:

  • 1.50% on the first $1 million
  • 1.25% thereafter

(Subject to a minimum annual fee of $3,000)

The fee is subject to South African Value Added Tax (VAT) of 14%, which will be included in the total fee at the time of calculating the fee amount.

This annual fee covers the discretionary management, dealing, custody and reporting services. Fees will be calculated and charged quarterly in arrears at the end of February, May, August and November, and will be charged pro rata for any part period of the quarter.

Investment Process

At W&I we use a collegiate approach throughout the investment process. This is based on a belief that in a highly complex, rapidly-changing world, supplying a group of engaged, experienced professionals with the best available inputs in a disciplined framework results in better, more consistent decisions than any individual can make on their own.
Our view of the investment environment is formed using a combination of in-house research in conjunction with the views of independent research organisations and challenged by our most experienced investment managers.
The process of forming our ‘house view’ starts with our Global Investment Strategy Group, whose role is to judge the global investment climate and advise our global businesses as to how much (or how little) risk we should be taking, independent of geographical location or type of client.
Local asset allocation committees in each of our regions then apply this advice to their own portfolios and benchmarks.
Finally, dedicated investment management committees interpret this message for each of the strategies that we offer – selecting investments and implementing geographic or sector tilts according to the individual mandate requirements.
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What makes a Global Leader?

A Global Leader is a company with sustainable competitive advantages in growing markets. These advantages come in many forms which include:
  • Industry competitive landscape e.g. oligopoly
  • Distribution
  • Brand & pricing power
  • Technological leadership
  • Dominant market share
  • Low cost position
These advantages often compound over time and are generally reflected in superior profitability (quality) metrics that, over the long term, drive share price performance. By contrast, strategically challenged companies tend to remain that way despite efforts to turn them around.
  • The Portfolio

    The GLP will comprise of 30-50 high conviction holdings. Stocks are selected using a “bottom-up” approach where the individual long-term attractiveness of an investment will be prioritised over geographic domicile.

    The GLP is based on ideas generated by W&I’s in-house research department, which is focused on developed world equity markets. This gives access to the majority of leading global business franchises, while also offering the protection of developed world-standard corporate governance.

    Within certain approved ranges, sector and regional allocation will be influenced by W&I’s global economic strategy.

    Additionally, a common-sense safety net analysis will be applied to avoid over-concentration in any one sector or theme.

    As noted, it is envisaged that the turnover of the GLP will be low, which is consistent with the long-term investment horizon of the service (five years or more).

  • Portfolio Construction

    The GLP is managed by the GLP Investment Committee, whose membership is comprised of our most experienced international investment managers and research analysts from W&I based in the UK and SA.

    The GLP process prioritises stock selection, sizing investments with primary reference to global sector exposure. Geographical exposure is monitored as an additional, but subsidiary risk check.

    Under normal market conditions the GLP is fully invested (excluding a residual cash balance to cover fees). The GLP Investment Committee can raise the cash weighting under volatile market conditions.

    portfolio construction image
  • Security Selection

    Having first screened approximately 1,000 developed market companies, each with a market capitalisation of more than $10 billion, looking for investments that satisfy our quality, growth and value criteria, the GLP Investment Committee chooses its investments from the universe of approximately 300 stocks actively monitored by W&I’s in-house equity analyst team.

    The analysts follow a fundamental research process, where a thorough understanding of the business and its drivers is a pre-requisite to recommending investment. In pursuit of this understanding, they meet with the management teams of target companies whenever possible and also with research experts from our stock-broking counterparties. They also use a wide range of quantitative analytical tools and systems to identify the value and sustainability of value that our target investments have generated. As a result, the team produces a preferred list of approximately 100 equity investments.

    The GLP Investment Committee then decides, from the preferred list of investments, which ones qualify as Global Leaders and constructs a portfolio from the most attractive amongst them.

  • Foreign Exchange Policy

    The reference currency of the GLP is US dollars. Our strategic policy is to not hedge any foreign currency exposure from stocks not quoted in US dollars.

  • Think seriously about risk

    The GLP strategy exclusively invests in equities that are among the highest risk assets, carrying a high degree of volatility even when held in a diversified portfolio. Associated with this is a greater risk of capital loss, especially if you unexpectedly need to sell at a time when the markets or the economic cycle are performing poorly. On the up-side, equities have the potential to yield the highest investment returns over time. Unlike fixed income, equities are also likely to offer some protection of purchasing power in the event that inflation accelerates.

     

    The right investment strategy balances your circumstances with the potential risks and returns.Whatever your investment objective, subject to your capacity to withstand losses, the greater the return you seek, the more risk you must be prepared to take.
  • Portfolio Implementation

    Your portfolio is a discretionary managed segregated portfolio of stocks tightly aligned to the GLP. The day-to-day management and activity of your portfolio is undertaken by a dedicated implementation team, with feedback provided to you by your investment manager. The dedicated team will continually align your portfolio to the GLP as agreed by the GLP Investment Committee.If you wish to invest on a bespoke basis, please contact your investment manager to discuss alternative services offered by W&I.

    At the inception of your portfolio, the dedicated team will begin investing on a discretionary management basis to bring your portfolio in line with the GLP. The timeframe for us investing new client monies into the GLP will be based upon prevailing market conditions and W&I’s investment outlook at the time.

    Once your portfolio is fully invested, any changes to the GLP will be implemented by the dedicated team under the guidance issued by the GLP Investment Committee for implementation.

  • Portfolio Reviews

    Your investment manager’s role is to review your personal circumstances and financial objectives, at least annually, to make sure that this strategy remains suitable for your overall investment strategy. Please advise your investment manager of any change in your circumstances as soon as possible.

    Your investment manager is also responsible for providing you with regular updates on the performance of the portfolio and the stocks within. Your investment manager is available for consultation at any time.