ETF launch brings high-conviction global stocks to the ASX

Having witnessed the strong growth in ETF issuers that joined the ASX during the first half of 2021, the team at Loomis Sayles has launched an active exchange-traded fund (ETF) version of its global equity fund for Australian investors, under the name of the Loomis Sayles Global Equity (ASX:LSGE).

Using the three alpha drivers of “quality,” “intrinsic value growth” and “valuation,” the fund manager filters through its universe of global companies looking to capture two market inefficiencies: “mispricing, through the valuation alpha driver, and a ‘duration effect’ through quality and intrinsic value growth alpha drivers.”

The Loomis Sayles Global Equity Fund uses an unconstrained, style-agnostic approach to picking stocks in a global “best ideas” portfolio. The fund manager says that “at any given time, the fund may have characteristics of a specific style; however, this is a result of where the investment manager is finding its best ideas based on its investment philosophy.”

Environmental, Social and Governance (ESG) filters are also employed in the fund manager’s stock selection strategy. “The ESG analysis includes a review of company financial statements and specific ESG reports when available, as well as a review of third-party ESG reports and their associated ratings.”

Looking at the performance table, the fund returned 25.4 per cent for the six-month period to June 30, which beat the benchmark. Over the year to June 30, the fund returned 28.9 per cent, which was a slight miss. Over the longer term, however, the fund easily outperforms the benchmark. Its investment strategy replicates that of the Loomis Sayles Global Equity Opportunities Composite. As it is a new fund, there is limited performance history.

According to the release, the fund implements the following:

• A disciplined, bottom-up, unconstrained approach to global equity investing
• Actively managed, style-agnostic unhedged global equity portfolio
• Flexibility to invest across market capitalisation, geography and sector
• A focus on risk management throughout the investment process
• A long-term investment approach

The top holdings span a wide range of the market from travel, to high-performance computing and technology.

Ishan Dan

Ishan is an experienced journalist covering The Inside Investor and The Insider Adviser publications.