The cost involved in constructing a sufficiently diversified portfolio of direct international equities is prohibitive for many investors. Investment exposure is therefore achieved through investing in the funds of global investment managers.
Beulah uses the practice of blending managers when investing through funds. The blending process aims to combine manager styles such as growth and value, with hedged and unhedged portfolios.
• Value Managers - typically focus on the purchase price required to pay for the equity and may invest in equities which, although not providing a strong growth expectation, appear inexpensive under various criteria such as Price/ Earnings (P/E) ratio or yield. Outperformance of a value fund is usually achieved in a falling market.
• Growth Managers - typically focus on investing in equities that have strong wealth creation potential and they may be prepared to pay a premium for what they consider a superior investment. Outperformance of a growth fund is usually achieved in a rising market.
• Index Managers - are often included in a portfolio to access ‘beta’ (market exposure), minimise tracking error and reduce costs. By combining a selection of managers with differing investment styles, investors may achieve an enhanced risk and return outcome and reduce return volatility through the full investment cycle. The risk of market timing is also minimised through manager blending.