Strategies
Active Fundamental Equity
All Country Global Equity Allocation Strategy
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All Country Global Equity Allocation Strategy
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Strategies
Active Fundamental Equity
All Country Global Equity Allocation Strategy
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The Active International Allocation (AIA) Team believes that the key determination of successful investment in global equity markets is the choice of region, country and/or sectors and industry. They believe an active top-down approach can consistently add value by overweighting regions, countries, sectors and industries, which have positive dynamics, unrecognized value, and supportive technical factors. The team’s goal is to overweight markets and sectors where it believes there is positive fundamental change that has not yet been discounted by the market.
The team’s approach emphasizes these macro decisions rather than thousands of individual securities. It believes that macro investment factors can be just as potent as bottom-up investment factors and seeks to exploit the fact that most money managers look at stocks and analyze individual corporate managements. Though this method can be attractive, the team thinks that corporate managements and stocks will be impacted by economic growth, policy decision-makers and overall moves in investor sentiment. This perspective offers clients a diversified way of investing—not just a diversified portfolio.
A diversified way of investing—not just a diversified portfolio |
Complementing the more widely available bottom-up, core investment capabilities, the top-down approach of the GEA investment program focuses on adding value by overweighting regions, countries, sectors and industries which the team believes have positive dynamics, unrecognized value and supportive technical factors. |
Long tenure of product and investment team |
Lead Portfolio Manager, Ann Thivierge, has been managing the AIA strategy since 1995, and joined Morgan Stanley in 1986. |
Rigorous, flexible and continuously evolving quantitative and qualitative analyses |
The team has enhanced the measurement of valuation and fundamental analysis across regions, countries, sectors and industries. For example, they added factors to compare and analyze profitability and operating leverage and developed factors that allow them to describe quality of earnings and balance sheet health. They also added various factors that help to describe the differences in fundamental macro operating environments across countries and regions. The enhanced framework readily allows the team to highlight opportunities to be further analyzed through fundamental research. |
1 | Fundamental Change |
The catalyst for market performance can be marginal changes in economic, corporate and political environments. The team gains market insight by visiting countries, meeting with central bankers, government officials, strategists, and economists, and analyzing both internal and external research to form investment opinions. In particular, the team searches for incremental shifts in policy or the operating environment, which they believe will impact profitability. |
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2 | Valuations |
Valuations are the core of the team’s decision-making process as the team invests in undervalued countries and sectors. The team analyzes and monitors relative and absolute valuation relative to long-term historical data across asset classes, regions, countries and sectors. The team then ranks the markets and sectors/industries on relative attractiveness and consistently examines ranking changes. |
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3 | Sentiment |
Overall market sentiment of particular countries and sectors/industries can be an important indicator of risk and return. The team consistently monitors global investor sentiment indicators, global fund manager asset allocation and equity positioning, and cross- and intra-asset global portfolio flows. |
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4 | Portfolio Implementation |
To implement investment decisions, the team builds baskets of stocks selected by a risk model, which does not factor in bottom-up analysis of names and is designed to broadly track country or sector/industry performance. The team invests in a diversified selection of stocks in the country, sector or industry. |