Suncorp Investment Management’s $1 billion World Equities Trust has replaced nearly all of its underlying managers, in a bid to finally meet and exceed its objective of outperforming the MSCI by 3 per cent p.a over rolling three year periods.

The old portfolio was falling short of that objective due to a large number of holdings (1065 names before the overhaul when the MSCI itself has only 1400) and a passive component of 15 per cent, adding up to a tracking error of just 1.2 per cent.

The old portfolio also had a significant US small cap bet, thanks to a clutch of managers such as Memphis-based Southeastern Asset Management.

The new portfolio has a tracking error of 6 per cent, 471 stock holdings at time of writing, and the US small cap bet has been replaced by an emerging markets allocation to Schroder Investment Management, which can range from 0-20 per cent of the World Equities Trust.

The one existing manager retained is Walter Scott, with its real return focused, growth-biased strategy.

The other new managers are growth manager Principal Global Investors, and value managers Epoch and Davis Advisors.

All the new managers bar Schroder have been assigned a 20 per cent strategic benchmark allocation, but a 10-30 per cent range is permissible.

The terminated managers were Southeastern, Wellington, Capital, GMO, NewSouth and Wasatch.

  

 

 

 

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