| Management Profile Chris Lees has been the fund manager of Baring Global Select Fund since September 2004. Lees is the Head of Global Stock Selection as well as a member of US Equity Team and Consumer Goods Global Sector Team. Portfolio Analysis We should tip our hat to, although we may not agree to, Baring Global Select Fund's clear investment conviction: aggressive, focused and concentrated. We appreciate it because this investment theme is vivid enough for investors to follow, and the fund sticks closely to the theme, leaving investors no worry about its style consistency. The fund is aggressive in its country allocation. Unlike other global large-cap growth equity funds, wh ich are quite US and Europe stocks centric, the fund keeps exposures to both North America and Europe (developed countries) at a low level and puts its focus on emerging markets and Asian markets like South Korea (4.3 percent as of October-end) and Singapore (6.7 percent). As of October-end, the fund also stashes around one-fifth of its assets in developing markets like Brazil (4.0 percent), Russia (3.5 percent) and Malaysia (3.8 percent), which have helped the fund to build a good record in the past few years. The fund recently adds weights to Japanese stocks to reflect its views that Japanese stocks are undervalued after a long bout of underperformance to global peers. Bottom-fishing needs clear vision and guts, thus investors should pay close attention to see whether this move works. The fund's portfolio is focused sectorwise. It has no exposure in technology, healthcare or consumer stocks. By contrast, Financials, materials and energy stocks, which accounted for 36.2 percent, 16.6 percent and 11.2 percent of the fund's asset respectively as of October-end, are considered as “structural growth” themed by Chris Lees. Investors should be wary of the sector concentration if the global market heads south. Given that the fund portfolio contains around 50 stocks only with weightings of around 2 percent each, the fund's portfolio is considered as concentrated. Although the fund size is merely USD36.5mn as of October-end, we suppose Lees will maintain this strategy regardless of the fund size growth, since he didn't alter the strategy for an inch even the fund size has grown for around 140 percent since March this year. Over 2007, the fund registered a respectable 1-year return of 38.08 percent, staying ahead of all its peers, which can be attributed to its boldly aggressive strategy. However, the fund has the highest performance volatility (3-year) among peers, proving that attractive returns are never a free lunch. In sum, with Sharpe ratio (3-year) of 1.51 (as of November-end) hovering in the middle of the category, the fund's risk adjusted return can hardly be considered as enticing. However, given its unique style, this fund is worth careful consideration for those who can handle aggressive investing. | ||
