UOB bank
The United Global Quality Growth Fund (the “Fund”) seeks to provide long-term total return by investing in equity and equity-related securities of companies listed and traded on stock exchanges globally. With this Fund, investors can gain exposure to high-quality stocks with strong growth potential in the global market.
Global equity opportunities in today’s markets
The global economy is facing headwinds, with rising inflation, interest rate hikes and ongoing international conflicts . Nonetheless, amidst such uncertainties, there remain areas of potential growth within global equities. Quality investing is a way to stay invested even during volatile periods as it focuses on companies with strong fundamentals.
What is quality investing?
This is a strategy that focuses on quality companies.
Productivity is often a critical driver of company earnings, and thereby, investment returns. Over time, the stocks of high-quality companies with leading levels of financial productivity can be expected to outperform the broader index.
How can quality investing improve your global equities portfolio?
How much has quality outperformed?
Quality stocks may not get nearly the same attention as value stocks (cheap companies) or growth stocks (fast-growing companies ). Yet, quality stocks have outperformed both value and growth in global markets for decades.
Source: MSCI, Morningstar, as of 30 June 2023.
The following factors contribute to quality stocks’ outperformance:
1) Quality stocks deliver higher returns at lower risk
Quality stocks tend to deliver superior risk-adjusted returns – higher returns and lower volatility – than growth and value stocks. This suggests that quality stocks are an attractive choice for investors seeking a balance between performance and stability.
Source: Morningstar, as of 30 June 2023. Risk (Annualised) refers to the standard deviation. Risk-adjusted return is calculated by return/risk. Quality refers to MSCI ACWI Quality Index, Growth refers to MSCI ACWI Growth Index, Value refers to MSCI ACWI Value Index, and World refers to MSCI ACWI Index.
2) Quality stocks are more resilient
Quality stocks have a lower downside capture ratio as compared to growth and value stocks, which indicates its tendency to experience smaller losses during market downturns.
Source: Lazard, MSCI, as of 30 June 2023. Downside capture is relative to the MSCI ACWI Index. Quality refers to MSCI ACWI Quality Index, Growth refers to MSCI ACWI Growth Index and Value refers to MSCI ACWI Value Index.
A downside capture of less than 100% indicates that a fund has lost less than its benchmark in periods of negative returns for the benchmark.
Why invest in the United Global Quality Growth Fund?
1) Consistent outperformance against benchmark
Over a 10-year period, the underlying manager, Lazard Asset Management, has delivered an annualised absolute return of 11.8%, outperforming its broad global benchmark by 3.0%.
Source: Lazard, as of 30 June 2023. USD terms. Performance is presented in a gross fee basis. Past performance is not an indicator of future results. Global equities refer to MSCI ACWI Index.
The underlying strategy, Lazard Global Quality Growth, has outperformed its benchmark in up markets, while also protecting capital in down markets. Since inception, it performed an average 6% better than its benchmark during months when market returns were positive, and 8% better during months when the market declined.
Source: UOBAM, Lazard, as of 30 June 2023.
2) Invests in quality compounders to enhance returns
Great businesses can make great investments. The strategy defines quality companies as companies that have competitive advantages that allow them to generate sustainably high returns on capital and reinvest at similarly high returns to drive future growth. Companies with these specific characteristics are called “Compounders”.
Compounding is the process of reinvesting any interest or profits earned. This can have a dramatic impact over time, because it accelerates the return on an investor’s capital.
Quality companies can apply the same principle by reinvesting cash back into the business at similarly high levels of financial productivity. This allows them to generate high cash flows, which then enables further reinvestment, and so on. This is called the “Compounding Cycle”.
The Fund focuses on identifying and investing in “Compounders" i.e. quality companies that are best able to leverage this powerful Compounding Cycle.
Compounders that sustain high financial productivity have historically outperformed the market, as their high financial productivity has allowed them to reinvest for growth.
Source: Bloomberg, Credit Suisse, Lazard, MSCI, as of 31 December 2022. Relative returns represent the equally weighted MSCI ACWI companies that were in the top decile for financial productivity (Cashflow Return on Investment (CFROI)) relative to companies their MSCI Industry Group, and maintained that decile ranking for the following year.
Compounders that sustain high financial productivity have historically outperformed the market. The chart below shows the underlying strategy's performance since its inception.
Source: Lazard, MSCI, as of 30 June 2023. USD terms. Rolling 3-year returns since inception: Calculated using monthly returns. Performance is presented on a gross of fees basis. The preliminary performance quoted represents past performance. Past performance is not an indicator of future results.
Each dot represents the underlying strategy's 3-year return through the month. The dots are mostly above the line, which means that the underlying strategy has largely outperformed the index over the same 3-year period.
3 ) Strategic portfolio composition
To ensure high quality, the Fund’s portfolio holds 40 to 50 names that are well diversified across sectors. While it has a focused approach, the Fund mitigates risks by avoiding taking large stakes in single holdings, with position sizing ranging between 2% and 5%.
The Fund also refrains from investing in sectors affected by external factors. As such, it does not have any holdings in sectors including Energy, Real Estate, Utilities and Materials.
4) Managed by global experts
Lazard Asset Management is a global investment advisory firm established in 1970, with a proven track record of helping institutions, governments, and individuals achieve their financial goals.
As part of the Lazard Group which has 175 years of financial expertise, Lazard Asset Management offers a range of equity, fixed income, and alternative investment solutions. Operating from 23 cities across 17 countries with a global staff of over 900, Lazard Asset Management manages US$203.3 billion1 of assets around the world.
Lazard’s Global Quality Growth team, comprising of experienced professionals with over two decades of sector expertise, focuses on investing in high-quality companies with sustainable competitive advantages.
| Fund Name | United Global Quality Growth Fund |
| Investment Objective | To provide long term total returns by investing in equity and equity-related securities of companies listed and traded on stock exchanges globally. |
| Sub-Manager | Lazard Asset Management (as of 1 September 2023) |
| Fund Classes Available3 | Class SGD Acc, Class SGD Acc (Hedged); Class USD Acc, Class USD Dist; Class SGD Dist, Class SGD Dist (Hedged); Class B SGD Acc; Class C SGD Acc (Hedged) |
| Subscription Mode | Class SGD: Cash & SRS Class USD and Class B: Cash Class C: CPF-OA |
| Minimum Subscription | Class SGD, Class USD and Class C: S$1,000/US$1,000 (initial); S$500/US$500 (subsequent) Class B: S$500,000 (initial), S$100,000 (subsequent) |
| Subscription Fee | Class SGD, Class USD and Class B: Currently up to 5%, maximum 5% Class C: Currently none, maximum none |
| Management Fee | Class SGD and Class USD: Currently 1.5% p.a., maximum 2.5% p.a. Class B and Class C: Currently 1.0% p.a., maximum 2.5% p.a. |
| Dealing Frequency & Deadline4 | Generally every business day, on a forward pricing basis up till 3pm (Singapore time) |
1Lazard Asset Management, as of 30 June 2023. Includes those of Lazard Asset Management LLC (New York) and its affiliates, but do not include those of Lazard Frères Gestion (Paris) or other asset management businesses of Lazard Ltd.
2Lazard Asset Management, as of 30 June 2023.
3Investors should refer to the Fund’s prospectus for more details on the different classes available. Please check with our distributors on the availability of the Fund classes.
4Please check with the distributor(s) or refer to the Fund’s prospectus for more details.
MSCI Data are exclusive property of MSCI. MSCI Data are provided “as is”, MSCI bears no liability for or in connection with MSCI Data. Please see complete MSCI disclaimer here.
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, and is likely to have high volatility due to the investment policies and/or portfolio management techniques employed by the Fund. 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.
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