HEAD-TO-HEAD: Investec vs Natixis

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All fund NAVs and benchmark performance have been converted to US dollars.

The chart shows the three-year performance of the funds and their benchmarks – Investec (MSCI AC World) and Natixis (MSCI World) – and the international equities asset class, according to FE data.

The Investec fund has consistently outperformed its benchmark and the sector during the period, especially from September 2015 to November 2016.

On the flipside, the Natixis fund underperformed its benchmark and the sector during the period. There was also a big gap of underperformance starting from September 2015 moving forward.

According to Brunt, given Investec’s quality style bias, it would have a tendency to outperform in weaker markets. However, it would only partially participate in strongly rising markets.

Indeed, the Investec fund’s annual discrete return in 2015 significantly outperformed the MSCI AC World Index when the index was down, according to FE data. However, the fund underperformed when the index was up in 2014 and in 2016.

Annual discrete performance

Source: FE Analytics

The Investec fund outperforms the category average and benchmark over a five-year period ending February 2017 with lower volatility than the benchmark. However, Brunt believes that returns have been “somewhat flattered by a style tailwind over the last few years, as markets have generally favoured quality-growth companies”.

He said that when compared with a subgroup of peers that have similar portfolio characteristics, such as having a quality bias and high exposure to defensive sectors, the fund’s returns do not stand out.

“Performance attribution against the mainstream benchmark also suggests that investment style has been a greater driver of alpha than stock selection,” he said. “We are pleased to see that the portfolio has become more diversified under Rossouw’s management, but note that relative performance has still been reliant upon stock selection within the consumer staples space,” he added.

For the Natixis fund, its performance has lagged the majority of its peers over the trailing one-, three- and five-year period, according to Schumacher.

Some of the underperformance versus the benchmark could be attributed to the currency. The fund is denominated in Singapore dollars. Over the trailing three years, the Singapore dollar fell roughly 10% versus the US dollar.

Natixis’ underperformance in both 2015 and the first seven months of 2016 have affected the fund’s performance record over the one-, three- and five-year period. Large stakes in financial firms as well as some picks in automakers have hurt the fund badly over those periods, he said.

“An occasional slump is an outcome of the fund’s approach,” Schumacher said. “The managers pay little attention to their benchmark or category peers, thus, the fund will likely be well out of step with its category at times,” he added.

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