Lazard Global Equity Franchise fund added to the Wealth Shortlist

The fund aims to deliver long-term growth by investing in companies with more predictable earnings and competitive advantages. The managers focus on companies they believe are undervalued – this means their share prices don’t yet reflect their growth potential.

Four co-managers have managed this fund since it launched in June 2015.

Matthew Landy is based in New York and has over 30 years of investment experience. Before joining Lazard in 2005, he worked as an equity analyst for Tyndall Investment Management. John Mulquiney is based in Sydney and has over 25 years of industry experience. Prior to joining Lazard in 2005, Mulquiney also worked at Tyndall Investment Management as an analyst.

Warryn Robertson is also based in Sydney and has over 30 years of industry experience. Robertson joined Lazard in 2001 and previously worked at PricewaterhouseCoopers Corporate Finance. Bertrand Cliquet is based in London and has over 25 years of industry experience. Prior to joining Lazard in 2004 Cliquet worked at Goldman Sachs.

The managers are based in different locations and time zones which makes it easier for them to meet more companies, no matter where they’re based. They communicate regularly and have managed the fund this way over many years, and they still work as a close-knit team when analysing companies and making decisions. They’re also supported by two analysts – Gary Yan who is based in New York and Anthony Rohrlach based in Sydney.

They start by looking for businesses they believe meet their “franchise” model. These are companies that have strong balance sheets, competitive advantages, and whose earnings they can more easily forecast. They then rank companies based on their current share prices and against their true value, and invest in those they think offer the most opportunity.

The managers have built a strong long-term track record. The fund has performed better than the average fund in the IA Global sector since launch in June 2015. As always, past performance isn’t a guide to future returns.

The fund hasn’t performed as well as its benchmark, the MSCI World Index. This is largely because the fund’s value investment style has been out of favour. Funds with a growth focus, which have tended to invest more in US and technology companies for much of this time, have done better. The fund invests less in these areas because share price valuations have been higher and haven’t offered as much future performance potential, in the managers’ view.

It's a similar situation for other funds with a value-focused approach. That said, this fund has performed better than many other global value funds, according to our analysis, and has also performed similar to the global value index, which we’d expect.

Importantly, this fund offers diversification from a lot of other global funds that have increased their exposure to areas like the US and tech in recent years. While there’s nothing to say these areas won’t keep performing well, it’s unlikely for any sector, theme, or country to outperform indefinitely, as different investing styles come in and out of favour.

Over the longer term, we expect the fund to do better when value investing is in favour, and the reverse is also true. A focus on business quality also means we expect the fund to hold up better than some other funds during down markets but may not rise as quickly during rising periods.

Overall, we think the team has the experience and skill to deliver good long-term returns to patient investors, although there are no guarantees.

The fund could add diversification alongside a more growth-focused fund or to a global investment portfolio.

We’ve also published a full fund update to go alongside this notification.