up 64% on MSCI since launch
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New Zealand fund managers gave up trying to pick international
years ago, Mike Gibbs-Harris, former chief investment
officer with Colonial First State NZ, is bucking the trend and
is running a US dollar-denominated international share fund from
Wellington, mostly for Asian and European high-net worth clients.
He stresses the fund’s offer documents aren’t registered
in New Zealand and he’s not promoting it here.
started the fund, initially for his own investments, back in late
1999. Then in January of this year, he converted it
into a managed fund - a “Cayman Islands Professional Fund” with
HSBC Trustees acting as custodian - for high-net worth investors
resident offshore. Since its launch, the fund has so far attracted
around $5 million. “Most people raise a bundle of capital
and then set up a fund. I’ve done it the other way,” he
While he also
would like to run institutional or pension fund money, he says
he doesn’t yet have a long-enough track
record for the asset consultants who are responsible for advising
Plus, because the composition of his fund will often be very different
from the MSCI’s, its tracking error may be an issue for them. “We
tend to have low levels of absolute risk, but high tracking error
[from the MSCI],” he says.
results bear that out. For the three years to 31 March he has
outperformed the MSCI by 64%. On an annualised
his returns have been 7% with 4% standard deviation against the
index’s –14% and standard deviation of 8.6%.
Gibbs-Harris says the fund has an “absolute returns” focus.
While he endeavours to outperform the MSCI, his primary objective
is to deliver absolute rather than relative returns.
his investment style as “taking a macro-approach
with a value bias.” It is very much a top-down fund with
Gibbs-Harris looking for markets where equities are reasonably
priced, in particular relative to bonds – “all investments
are compared to the risk-free rate,” he says. He then looks
for good buying opportunities in those markets.
The fund is currently
invested in around 40 stocks spread across 12 markets, including
New Zealand, Hong Kong, Sweden, Austria and
Switzerland. It is also 15% invested in bonds: 5% in Australian
index-linked bonds and 10% in Swedish bonds.
While New Zealand
is furthest away from most places, Gibbs-Harris says it is possible
to run global money from here, largely thanks
to the internet – but adds it probably wouldn’t have
been possible five years ago. While he does have to travel more
than if he were based in the USA or London, he says he’s
not constantly travelling. However, there are compensations for
the extra travel, he says. New Zealand is a relatively cheap country
to live and do business in, and not being based close to the main
global markets makes it easier not to have geographical biases.
You can make very dispassionate decisions here,” he says. “Less
than 0.1% of the world’s market is here. Everything is offshore.”
© 2003 financial alert Limited. (Used with permission)
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