The Quest for Alpha Continues with a Global Focus

The search for elusive alpha – the excess return of a fund over its benchmark index – is set to assume increasing importance, especially in the current turbulent market conditions. A majority of respondents to a recent survey, by consultancy Watson Wyatt Worldwide expected “the appetite for alpha to rise, stirred by a focus on absolute return investment.” This was among the findings of the ‘2020 Vision’: Research on the future pension and investment landscape’ survey, which received 486 responses, predominately from experienced investors in Europe and Asia. Commenting on the report’s findings, Neil Rogan, head of global equities at Gartmore, observed that “global growth was the best sector in which to find alpha in 2007.” Neil, who manages both the Gartmore Global Focus Fund and Gartmore SICAV Global Focus Fund, has similar expectations for 2008.

The unconstrained ‘Best Ideas’ Global Focus Funds have proved capable of delivering successive years of outperformance in rising and falling markets, as well as in growth and value ones, notes Neil. Scouring the globe for best ideas enables the Funds to avoid economic black spots and to remain agile. A rigorous sell discipline also underpins Neil’s investment approach. As part of this process, a stock will usually be sold if the outlook for the industry or franchise deteriorates, or if the price target is reached, with no compelling reasons to raise that target. Neil stresses that “the story has to be still improving for us to keep the stock.” This is in marked contrast to many, “who would keep a stock if the underlying story hasn’t changed.”

The Gartmore Global Focus Fund, which recently celebrated its seventh anniversary, returned 38% since inception at the end of January 2001 to end January 2008 versus the MSCI World Index’s 0.30% for the same period. An Associate Member of the UK Society of Investment Professionals, Neil is rated AAA4 by Citywire (citywire.co.uk). The Gartmore SICAV Global Focus Fund marked its third anniversary in October 2007.