27.07.2011

Sebastien Legoff

Portfolio Manager

Delubac Asset Management

 

Attractive for both less experienced investors and those with a good knowledge of investing in capital markets, the WPP New Global Equity Markets Risk 18% Portfolio is an ideal opportunity for any investor looking for long-term capital growth.

 

OVERVIEW

The Fund is structured as a fund of funds, allowing investors to invest according to their level of risk tolerance and investment goals. It invests a minimum of 75% of its net assets in equities and equity related securities and aims to achieve a three year historic volatility within a range of 15% to 21%. Focusing on global equity and bond markets and aimed at maximising long-term capital growth in EUR, the portfolio includes more than 20 investment funds diversified across worldwide developed, emerging as well as frontier markets.

 

STRENGTH IN DIVERSITY

There are a number of key benefits the Fund provides, including:

  • Attractive growth potential driven by a mixture of assets from developed, emerging, and frontier markets.
  • Investment risk profile is maintained with actively managed volatility.
  • A significant part of Portfolio investment is allocated in emerging markets with growth potential expected to lead global recovery.
  • Global diversification with varied asset classes.

 

Diversity is one of the cornerstones of the Fund’s strength. While the year has been a challenging one so far the Fund’s diversity has helped to keep volatility at set limits. Following the emerging markets’ strong close to 2010, this year has seen investors reallocating money to developed markets – particularly to the US where economic momentum has been gaining traction. This, combined with higher inflation and rising interest rates in emerging economies, has seen these markets underperform their developed peers in recent months while the further strengthening of the Euro sapped the performance of most underlying funds over 2Q2011. However, the Fund benefited from its diversification across different asset classes and countries.

IMPORTANCE OF STRATEGY

Beyond the benefits outlined above, a fundamental element of the Fund’s successful performance is its investment manager’s strategy. The manager’s current strategy takes into account a broad range of factors, all of them carefully monitored and considered so that the Fund can perform to its maximum.

Among these is that emerging markets are likely to improve in the second half of the year as inflation peaks. The recent inflation in emerging markets is also part of a new long-term trend as growth in these regions continues to outpace that of the developed world. The primary risk to inflation remains social and political instability in the Middle East and North Africa (MENA) nations which has recently seen turmoil.

 

The impact of the events in Tunisia, Egypt, Libya, and many other nations in the MENA region, has been felt across the global economy, with outcomes such as rising oil prices and lower risk appetite for emerging market equities. In this context, as far as individual country bets are concerned, the manager is likely to decrease exposure to the MENA region.

 

OPPORTUNITY KNOCKS

Crucial to the Fund is, of course, the conditions and performance of world markets, and in terms of the global outlook, there is an attractive opportunity ahead for investors. The passage of austerity measures through the Greek parliament in June has deflated fears that Greece will default for the short term, but the longer term perspective remains shaky though. Nevertheless investors around the world turned bullish, sending stocks higher in a broad rally. The manager has a relatively optimistic view of the latter half of 2011 and believes investors should see the recent pullback in the emerging markets as an attractive opportunity to add exposure to this region for the longer term.

Corporate balance sheets remain flush while cash and earnings continue to hold up remarkably well. Additionally, much of the bad news seems to be "known" and may already be reflected in stock prices, setting up the possibility for upside surprises as some of the temporary burdens begin to ease. Finally, investor optimism has taken a blow from recent events, which is typically a contrary indicator— a potentially good sign for the market in the coming months.

 

INVESTMENT MANAGER

Delubac Asset Management is the asset management arm of Banque Delubac & Cie, a French independent private bank established in 1924. The portfolio management company has specialised since its creation in fund picking (multi management) and asset allocation. The company offers its clients discretionary portfolio management services and collective investment vehicles. Under a family banner with a growing reputation, Delubac Asset Management has notably developed a niche expertise in emerging markets funds of funds.

 

IMPORTANT NOTE:

This report has been prepared for information only, and it does not represent an offer to purchase or subscribe to shares. World Performance Portfolios (“WPP”) is registered on the official list of collective investment undertakings pursuant to part I of the Luxembourg law of 20th December 2002 on collective investment undertakings as an open-ended investment company. WPP believes that the information is correct at the date of production while obtained from carefully selected sources considered to be reliable. No warranty or representation is given to this effect and no liability can be assumed for the correctness or accuracy of the given information which may be subject to change at any time, without notice. Past performance provides neither a guarantee, nor an indication of future performance. Value of the shares and return they generate can fall as well as rise. Currency fluctuations, either up or down, may also affect value of the investment.Due to continuing market volatility and exchange rate fluctuations, the performance may be subject to significant changes over a short-term period. Investors should be aware that shares in the financial instruments entail investment risks, including the possible loss of the invested capital. Performance is usually calculated on the basis of the relevant NAV unless stated otherwise. Performance shown does not take account of any fees and costs associated with subscribing or redeeming shares. It is assumed that all dividends were reinvested. WPP prospectus is available and may be obtained through www.1cornhill.com. Before investing in any WPP Sub-fund(s) investors should contact their financial adviser / legal adviser / tax adviser and refer to all relevant documents relating to the WPP and its particular Sub-fund(s), such as the latest annual report and prospectus that specify the particular risks associated with the Sub-fund, together with any specific restrictions applying, and the basis of dealing. In the event investors choose not to seek advice from a financial adviser / legal adviser / tax adviser, they should consider whether the WPP is a suitable investment for them.