Jana Advisers has seen three quarter of its recommended active equity managers outperform against their benchmarks over the past year.
Steven Carew, head of research at the firm, says the success rate of 75-80 per cent is attributable to near ideal conditions for stock pickers.
“The dispersion between and within markets is quite wide so that is a good environment for an active manager. It is unusual to see it that high.”
Jana’s recommendations have been based on a bias towards value and quality companies and towards international equities over Australian.
“We like global equities because the industry structure is more diverse,” said Carew. “There are more degrees of freedom for managers to add value, avoid risk and to outperform.”
The firm’s bias towards international equities comes from the belief that developed markets are recovering as the domestic economy slows down. It also believes the Australian market is overly dominated by fully valued banks with little prospect of high growth and mining firms facing a slowdown in demand from China.
Among active managers Jana has a preference for strategies that focus on quality companies with strong balance sheets and with earnings or pricing power.
“In a low growth environment they would be able to produce relatively consistent earnings,” said Carew. “Over the recent 12 months we have been topping up value exposures and these stocks have done quite well. We are conscious 12-18 months ago that sufficient exposure was needed given the likelihood of improvement in the developed economies.”
- The forthcoming CIO survey in December’s edition of Investment Magazine has found that over the next three years close to three quarters of all super funds (74 per cent) planned to cut their allocation to domestic equities, taking the average allocation from 26.1pc to 23pc. Some of this money would find its way into increased allocations to global equities (47 per cent plan to increase) and some to property or infrastructure.