HEAD-TO-HEAD: Stewart versus T Rowe Price

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Introduction

Investors’ optimism about global equity markets seems to be rising, despite anxieties about the delta variant of the coronavirus and the months-long fears of incipient inflation.

According to the State Street Investor Confidence Index (ICI) for August 2021, investor confidence was up across all regions compared with July, led by Europe which rose 11.6 points, Asia by 11.2 points and North America, albeit by a more modest 5.1 points

The ICI measures investor confidence or risk appetite quantitatively by analysing the actual buying and selling patterns of institutional investors. The index assigns a precise meaning to changes in investor risk appetite: the greater the percentage allocation to equities, the higher risk appetite or confidence.

“In spite of ongoing concerns related to the delta variant and vaccine numbers, investor confidence remained remarkably resilient in August and Global ICI recorded its highest reading in more than three years,” said Rajeev Bhargava, head of Investor behavior research at State Street Associates.

Yet, anxieties persist.

As Irene Goh, head of multi-asset solutions, Asia Pacific at Aberdeen Standard Investments, points out, now that nations have progressed beyond the initial stages of the recovery cycle, investors are fretting over macro-economic data as they look for potential warning signs of a reversal in economic growth.

Foremost are fears that the delta variant will derail global recovery, although Goh believes that investors should really be focusing on a pick-up in inflation.

Persistent inflation would weigh on company earnings by raising costs and hurting wages, causing central banks to raise interest rates and negatively impacting equity markets.

Against this background, FSA asked Ronald van Genderen, analyst at Morningstar, to select two global equity products for comparison: the Stewart Investors Worldwide Leaders Sustainability Fund and the T. Rowe Price Global Growth Equity Fund.

Source: FE Fundinfo, Morningstar. Data in US dollars

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