Mon, 18/02/2013 - 06:01
Salient Partners, a USD17.4bn asset management firm, has launched the Salient Global Equity Fund, which seeks to generate long-term capital appreciation by primarily investing in exchange-traded global equities.
Under normal market conditions, at least 80 per cent of its net assets, plus any borrowings made for investment purposes, will be allocated to common stocks and other equity securities, such as preferred stocks or convertible stocks.
At any given time, at least 40 per cent of the fund's net assets will be invested in common stocks and other equity securities of issuers based outside of the US. In order to reduce or increase certain exposures, the fund may invest in various futures contracts and other financially linked derivatives and instruments.
"Despite the fact that equities around the world performed very well during 2012, we believe many retail and institutional investors remain hesitant to invest in the global equities market due to the extreme volatility that followed the financial crisis," says Ajay Mehra, fund portfolio manager and Salient head of equities. "The Salient Global Equity Fund seeks to combine the strong track record of the investment team in fundamental stock picking with Salient's risk-management experience."
The fund's investment process begins by filtering stocks in the MSCI All Country World Index, which includes 2,441 companies with a combined market capitalisation of USD30.8 trillion from 24 developed markets and 21 emerging markets, down to approximately 150 stocks using quantitative and fundamental research.
Potential equity investments are divided into three categories: Capital Growth (companies that Salient believes have sustainable competitive advantages and attractive industry or thematic tailwinds which trade at reasonable valuations and are expected to compound value over time), Yield (companies that Salient believes have above-average dividend yields and/or cash flow yields with modest growth expectations) and Opportunistic (companies that are undergoing significant structural or cyclical changes that Salient believes are likely to transform the future value creation potential of the underlying businesses).
All potential investments are subjected to a hybrid investment approach of top-down metrics and bottom-up fundamental research. The fund's portfolio consists of between 40 and 60 stocks (though it may include up to 70 stocks) which have passed this investment screening process. Typically, between 70 and 85 per cent of the portfolio is composed of stocks from issuers in developed markets, while up to 30 per cent of the equities can be from issuers located in emerging markets.
The adviser may also employ systematic or "rules-based" overlays designed to hedge the portfolio and reduce exposure in an attempt to control volatility and/or to supplement the portfolio and increase exposure.
Along with Mehra, Lee Partridge, Salient chief investment officer, also serves as portfolio manager of the fund.
"As a global investor, Ajay has developed unique approaches to security selection, risk management and portfolio construction," says Partridge. "The combination of his distinct methodologies in these areas creates the foundation of a portfolio which we believe is an attractive option for investors."
"Salient believes that emerging markets are positioned to grow faster than developed markets and that higher-growth companies in emerging markets may have stronger balance sheets than their counterparts in developed markets. Salient seeks to provide investors with a global equities fund that has a long-term outlook," says Mehra. "Salient's managers have historically utilised their expertise to create portfolios which are diversified across sectors and geographies, and we now have the opportunity to seek to provide investors with diversified and risk-managed exposure to global equities."
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