Global small caps remain attractively valued versus large caps, with supportive earnings trends; however, as the likelihood of multiple US rate cuts has faded, we trimmed exposure moderately to reduce sensitivity to a higher inflation and higher-for-longer rates environment while retaining a constructive allocation.
Artisan Global Discovery and Arrowstreet Global Small Companies were trimmed, with Vinva Global Alpha Extension introduced to provide broader global equity exposure and reduce the portfolio’s sensitivity to global small caps. While small companies continue to offer attractive long-term value, the outlook has become more balanced as expectations for multiple US rate cuts have faded and inflation and interest rate risks remain elevated. The change retains exposure to growth opportunities while improving diversification and moderating the portfolio’s reliance on a small-cap recovery.
The Vinva Global Alpha Extension Fund is a global equity strategy that invests predominantly in a long portfolio of shares in listed global companies. The Fund seeks to deliver consistent outperformance (alpha) through different market conditions by applying its differentiated systematic approach to investing. The Fund leverages Vinva’s experienced investment team to identify opportunities and uses technology to implement those opportunities into the Fund’s portfolio in a highly disciplined and efficient manner (often referred to as systematic investing).
Vinva Investment Management Limited (Vinva) is an Australian-based equities manager specialising in running active Australian and global equity strategies with a heavy focus on the use of technology as part of its investment process. Although Vinva was established in 2010, the team has a history of working together dating back to 1997 at Barclays Global Investors (BGI), one of the largest investment managers in the world. The investment team at Vinva is led by Managing Director and Head of Equities Morry Waked, who has 30 years of industry experience, including the roles of Head of Equity Investments and Chief Investment Officer for BGI’s Australian business and Global CIO for BGI’s US$250 billion Global Active Equity business. Morry is supported by Head of Research Andrew Jackson and Portfolio Manager Nick Burt — each with almost three decades of investment management experience — along with a strong and stable investor-aligned team of portfolio managers, research analysts, and investment technology specialists.
Vinva applies a systematic approach to investing that combines the skill and expertise of its investment team to identify opportunities, with the use of proprietary state-of-the-art technology (essentially very powerful computer programs) to take advantage of these opportunities in a highly disciplined and efficient way, processing vast amounts of real-time information quickly and systematically. The Fund’s portfolio is designed to deliver outperformance through different market conditions and is structured to reduce sector or style (e.g. value/growth) bias. Whilst the Fund is relatively new, the strategy has a proven long and dependable track record of delivering outperformance for investors. The Fund is highly differentiated from other strategies used in the portfolio, further enhancing diversification and the consistency of returns across the portfolio.