You’ve got the whole world in your hands

Well, maybe not in your hands. But here’s a one-stop mutual fund for global investing that puts a very big part of the whole world into your portfolio.

The Money Reporter recommends many individual investment securities for the Canadian component of your portfolio, but no individual foreign stocks. That’s because we consider mutual funds as a good way to cover off U.S. and international exposure. If you’re looking for just one fund to cover off your foreign exposure, we think Capital Group Global Equity Fund (Series A fund code: CIF843 (FE)) is a good choice.

This mutual fund seeks long-term growth through mostly common stocks, including growth-oriented stocks, on a global basis. Future income is a secondary objective.

Capital Group’s basic investment philosophy is to seek undervalued securities that it believes represent good long-term investment opportunities. The portfolio advisor uses a “bottom-up”, research-driven approach to investing that focuses primarily on individual companies, not industries or regions. Securities may be sold when the fund’s managers believe they no longer represent good long-term value.

This foreign equity fund prefers growth stocks to income

Under the Capital Group approach, a number of managers have individual responsibility for a portion of each fund’s assets. The global equity fund employs three managers, each with over 20 years experience at Capital.

It’s an approach that has paid off. Since its inception in November 2002, the fund’s compound annual growth rate is a decent 7.8 per cent.

This past decade, its annualized return of 6.8 per cent ranks in the top quartile of the global equity category. The fund has also performed in the top quartile in each of the past three- and five-year periods. Over the past year, it’s performed in the second quartile.

What’s more, results have been consistently strong on a year-by-year basis. The fund performed in the top half of the category in every year for the 10 years ended Dec. 31, 2016.

The fund’s portfolio is well diversified geographically, with a focus on the U.S. The geographic breakdown includes: the U.S., 48.9 per cent; Europe ex-U.K., 14.1 per cent; emerging markets, 10.4 per cent; Japan, 8.8 per cent; Canada, 6.4 per cent; the U.K., 3.7 per cent; the Pacific Basin ex-Japan, 2.1 per cent; and cash, 5.6 per cent.

Top holdings include Amazon, 2.2 per cent; Nintendo, 1.8 per cent; and Microsoft, 1.7 per cent.

Capital Group Global Equity is a buy if you want mostly long-term growth from a global equity mutual fund and you can tolerate medium investment risk.

Two others among best foreign equity funds

Mac Ivy Foreign Equity and Templeton Growth are are two other global equity funds followed regularly by the Money Reporter.

Both the Capital Group and Templeton funds are geographically well-diversified offerings that give you some exposure to emerging markets as well.

The Mac Ivy Fund, by contrast, generally avoids emerging markets, favours defensive investments, holds the highest cash position of the three funds, and is also the least volatile. As such, we regard it as the most conservative of the three, so you can choose among them accordingly.

In view of the strong out-performance of Canadian equities this year, we view global equity mutual funds as good, contrarian choices right now.

 

Money Reporter, MPL Communications Inc.
133 Richmond St. W., Toronto, On, M5H 3M8, 1-800-804-8846