The United Global Durable Equities Fund offers investors a more measured approach to equity investing
Amid signs that the global economy is holding up better than expected, investors are growing more optimistic about equities. Global equity funds received US$5.3 billion of inflows in July 2023 and have taken in around US$8 billion over the past three months1.
But there are many investors who, having abandoned equities during the post-Covid period of steep interest rate hikes, are yet to re-enter the market.
For those thinking of dipping their toes into global equities again, Wellington Management, the sub-advisors for the United Global Durable Equities Fund, believe that certain companies offer relatively better price stability.
These are defensive and often lower-profile companies that:
- deliver value creation via distinctive and evergreen products/services
- trade at moderate valuations as measured by their Earnings Per Share ("EPS")
- are able to generate good cash flows
- have low sensitivity to broader economic conditions
- have good management practices such as cost control and skilled execution
- offer attractive dividend payouts
More about the United Global Durable Equities Fund (“Fund”)
Unconventional opportunities
Sub-managed by Wellington Management, this Fund is rated 5 stars by Morningstar2 and aims to provide attractive risk-adjusted total return by investing in stable businesses at reasonable prices.
Year-to-date, the Fund has returned 6.23 percent. Since its inception in 2015, the Fund’s returns have averaged 7.31 percent per annum. During this period, the Fund’s only negative years were 2018 and 2022, where it returned -4.95 percent and -6.58 percent respectively3, outperforming the index.
Fig 1: Fund performance in down years (%)
Fig 2: Fund performance since inception
Source: UOBAM, as of 31 July 2023. Fund performance is calculated on a NAV to NAV basis, SGD basis.
In particular, the portfolio manager seeks to find stability in unconventional places such as small and mid-cap firms, those from unusual sectors or disfavoured geographies, or those that do not meet the specific criteria of traditional growth or value investing.
This tends not to hold “exciting” names which typically captures the majority of the market’s attention. For example, the top 10 names in the MSCI All-Country World Index (“ACWI”) such as Apple, Microsoft, Nvidia, Tesla, JPMorgan Chase, do not feature in this Fund at all.
Instead, the Fund offers investors unique exposures to firms and sectors that are not in the headlines but are nevertheless profitable due the non-cyclical nature of their business. For example, the Fund’s top holdings currently include players in the insurance, pharmaceutical and utility industries.
As a result, the Fund can be used as a diversifier for investors who already have exposure to the standard global names. Alternatively, this Fund is a reliable first foray back into global equities for those looking for steady gains, rather than thrills and spills.
Fig 3: Fund top 10 holdings
| Company Name | Weight | Description |
| Intact Financial Corp | 6.37% | Canadian multinational property and casualty insurance company |
| Constellation Software | 4.43% | Canadian diversified software company for public and private sector markets |
| Novartis AG | 3.68% | Swiss-based pharmaceutical company that is one of the world’s largest |
| AIA Group | 3.63% | Hong Kong-based multinational insurance and finance corporation |
| Brenntag SE | 3.54% | German multinational chemical distribution company |
| Engie SA | 3.38% | French multinational utility company involved in electricity generation, natural gas, nuclear, renewable energy and petroleum |
| T&D Holdings Inc | 3.30% | Japanese insurance company mainly engaged in the life insurance business |
| Arthur J Gallagher | 3.27% | American global insurance brokerage and risk management services firm |
| BWX Technologies | 3.21% | American manufacturer of nuclear components and fuel |
| Performance Food Group | 3.08% | American food distributor and supplier |
Source: UOBAM, 31 July 2023.
Lower risk, regular returns
This Fund aims to deliver moderate but steady returns of 10 percent per annum over the long haul, with less risk than broad equity markets4.
In particular, the Fund has defensive characteristics that has enabled it to outperform the broader market during periods of market downturn. Since inception, the Fund has delivered an average of 0.7 percent higher returns than its benchmark during months when the market declined5.
This does not factor in the Fund’s annualised dividend yield, which is currently 5.50 percent6 per annum, paid out monthly (Class A SGD Dist).
Fund Details
| United Global Durable Equities Fund, as of 31 July 2023 | |
| Investment objective | The Fund seeks total return consisting of capital appreciation and income over the long term by investing primarily in equity and equity related securities of companies listed and traded on stock exchanges globally. |
| Distribution Policy | Monthly distributions of up to 5.50% p.a.* *Distributions are not guaranteed. Distributions may be made out of income, capital gains and/or capital. This relates to the disclosed distribution policy as set out in the Fund’s prospectus. |
| Fund class available7 | Class A SGD Acc Class A SGD Dist Class A USD Acc Class A USD Dist |
| Management fee | Currently 1.75% p.a.; maximum 2.5% p.a. |
| Subscription fee | Currently up to 5%; maximum 5% |
| Minimum subscription / trading size | S$1,000/US$1,000 (initial) S$500/US$500 (subsequent) |
Complementary funds
The two broad global equity funds offered by UOB Asset Management have a significantly different focus and are therefore designed to be complementary. Here is a quick comparison table to help investors identify the differences:
| United Global Durable Equities | United Global Quality Growth Fund8 | |
| Benefits | This fund provides downside protection and regular income. It has the potential to deliver steady returns even in difficult market conditions | This fund provides investors with exposure to growth opportunities that are potentially sustainable across different economic cycles |
| Distribution policy | Monthly distributions of up to 5.50% p.a.* | Monthly distributions of 3.50% p.a.* |
| Standard deviation (3-Year) | 15.17 | 17.75 |
| Sharpe ratio (returns per unit of risk) (3-Year) | 0.52 | 0.47 |
| Maximum drawdown (3-Year) | -16.93 | -29.15 |
| Returns (3-Year annualised) | 7.85 | 8.37 |
| Top 5 sector allocation (%) | Financials: 29.31 Industrials: 27.52 Health care: 19.04 Information Technology: 11.20 Consumer Staples: 5.40 |
Information Technology: 24.7 Industrials: 20.5 Financials: 17.3 Health care: 13.5 Communication Services: 9.0 |
| Top 5 geographical allocation (%) | United States: 47.6 Canada: 15.9 France: 7.9 Netherlands: 4.0 Switzerland: 3.7 |
United States: 64.0 Japan: 5.8 Netherlands: 5.8 Canada: 4.8 Sweden: 3.3 |
* Distributions are not guaranteed. Distributions may be made out of income, capital gains and/or capital. This relates to the disclosed distribution policy as set out in the Fund’s prospectus
Source: United Global Quality Growth Fund – UOBAM, Lazard Asset Management, as of 31 July 2023. United Global Durable Equities Fund – UOBAM, Wellington Management, as of 31 July 2023.
1Source: Bloomberg Finance, L.P., State Street Global Advisors, as of July 31, 2023
2UOBAM, Morningstar, July 2023
3UOBAM, as of 31 July 2023. Fund performance is calculated on a NAV to NAV basis, SGD basis, SGD Dist share class.
4Durable Equities Strategy Review with UOB Asset Management, 27 July 2023
5Source: UOBAM. Analysis based on monthly United Global Durable Equities Fund returns from 5 August 2015 to 31 July 2023. Past performance of the Fund or UOBAM or Wellington Management is not necessarily indicative of future or likely performance of the Fund, UOBAM or Wellington Management.
6Distributions are not guaranteed. Distributions may be made out of income, capital gains and/or capital. This relates to the disclosed distribution policy as set out in the Fund’s prospectus.
7Investors should refer to the Fund’s prospectus for more details on the different classes available.
8Information presented is based on the fund’s underlying strategy, Lazard Global Quality Growth
If you are interested in investment opportunities related to the theme covered in this article, here is a UOB Asset Management Fund to consider:
|
MSCI Data are exclusive property of MSCI. MSCI Data are provided "as is", MSCI bears no liability for or in connection with MSCI Data. MSCI full disclaimer here.
Distributions will be made in respect of the Distribution Classes of the Fund. Distributions are based on the net asset value (NAV) per unit of the relevant Distribution Class as at the last business day of the calendar quarter or month. The making of distributions is at the absolute discretion of UOBAM and that distributions are not guaranteed. The making of any distribution shall not be taken to imply that further distributions will be made. UOBAM reserves the right to vary the frequency and/or amount of distributions. Distributions from a fund may be made out of income and/or capital gains and (if income and/or capital gains are insufficient) out of capital. Investors should also note that the declaration and/or payment of distributions (whether out of income, capital gains, capital or otherwise) may have the effect of lowering the NAV of the relevant fund. Moreover, distributions out of capital may amount to a reduction of part of your original investment and may result in reduced future returns. Please refer to the Fund's prospectus for more information.
This document is for general information only. It does not constitute an offer or solicitation to deal in units in the Fund (“Units”) or investment advice or recommendation and was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. The information is based on certain assumptions, information, and conditions available as at the date of this document and may be subject to change at any time without notice. No representation or promise as to the performance of the Fund or the return on your investment is made. Past performance of the Fund or UOB Asset Management Ltd (“UOBAM”) and any past performance, prediction, projection or forecast of the economic trends or securities market are not necessarily indicative of the future or likely performance of the Fund or UOBAM. The value of Units and the income from them, if any, may fall as well as rise. Investments in Units involve risks, including the possible loss of the principal amount invested, and are not obligations of, deposits in, or guaranteed or insured by United Overseas Bank Limited (“UOB”), UOBAM, or any of their subsidiary, associate, or affiliate (“UOB Group”) or distributors of the Fund. The Fund may use or invest in financial derivative instruments, and you should be aware of the risks associated with investments in financial derivative instruments which are described in the Fund’s prospectus. The UOB Group may have interests in the Units and may also perform or seek to perform brokering and other investment or securities-related services for the Fund. Investors should read the Fund’s prospectus, which is available and may be obtained from UOBAM or any of its appointed agents or distributors, before investing.You may wish to seek advice from a financial adviser before making a commitment to invest in any Units, and in the event that you choose not to do so, you should consider carefully whether the Fund is suitable for you. Applications for Units must be made on the application forms accompanying the Fund’s prospectus.
This advertisement has not been reviewed by the Monetary Authority of Singapore.
UOB Asset Management Ltd Co. Reg. No. 198600120Z
