Old Mutual Global Best Ideas Fund research update

Old Mutual will make a number of changes to their Global Best Ideas Fund with effect from 1st January 2016. These are as follows:

Benchmark: The fund's benchmark will change from the MSCI AC World GDP-Weighted Index to the MSCI World Equal-Weighted Index.

Weighted verses equally-weighted indices

• The GDP weighted index takes into account differing country sizes and the weight of each country in the index is derived from its economic size (using GDP data) rather than the size of its equity market. In the equally weighted index, each country accounts for an equal proportion of the index.
• The MSCI AC World GDP-Weighted Index includes exposure to emerging markets whereas the MSCI World Equal-Weighted Index does not.

Lead manager role: Lee Freeman-Shor is responsible for the asset allocation of the fund and selection of the underlying fund managers. At present, the fund is predominately invested in other funds. From the 1st of January, the manager will have the ability to invest up to 15% of the fund directly in individual companies. He also has the flexibility to invest in higher-risk smaller companies.

Our view

The fund has undergone a number of changes in recent years and is no longer the proposition we were originally positive on. We will meet with Lee Freeman-Shor in the New Year to gain a deeper understanding of the reasoning behind the latest round of changes and will update clients then. This is not a recommendation for investors to take any action providing the fund continues to meet their objectives. In the meantime, investors seeking exposure to the global stock market may wish to consider our current selection of Wealth 150 funds.

View the key investor information document for the Old Mutual Global Best Ideas Fund

A brief history

The fund was removed from the Wealth 150 list of our favourite funds across the major sectors in early 2015. It had undergone a number of changes we felt had not benefitted investors. This included a shift in the asset allocation of the fund to reduce exposure to North America, which was performing well, to increase exposure to Asia and higher-risk emerging markets (which have performed less well).

We also expected stock selection to have a significant impact on returns, given the track record and pedigree of the underlying managers (many of whom feature individually on the Wealth 150). This did not come to fruition and we felt the 10 stock best ideas concept was not necessarily the best way for investors to access the underlying managers’ stock picking abilities.

Find out more about Old Mutual Global Best Ideas Fund including how to invest

Please read the key features/key investor information document for Old Mutual Global Best Ideas Fund in addition to the information above.