Amazone Euro Fund
October 23, 2007Thanks for visiting! If you like what you're reading, you may want to subscribe to my RSS feed.
Yesterday’s FT had an interesting article about a new investment fund that pre-selects its companies based on the male-female ratio in key management positions. Their reasoning is based on studies that have shown greater stock price resilience in weak markets for companies with a higher proportion of women in roles of responsibility. The fund is trying to exploit the basic premise that such firms tend to outperform over time.
A closer look, however, shows that the fund has underperformed its benchmark index since it launched in April 2006. While the MSCI Total Return (Euro) gained around 21% in that time, the Amazone Euro Fund only achieved 17%. Bearing in mind that it is an actively managed fund and hence comes with an annual management fee of 1.5%, the overall performance is even lower.
On the other hand, the fund has a long-term focus with an investment horizon of at least 5 years, which suggests its prime time might be yet to come. The 30 odd companies which are currently held in the portfolio achieved a mean operating margin of 11 per cent coupled with a mean return on equity of 19 per cent - all of which are more than stable figures and might boost performance during bearish market times.
I’m still a little on the fence with my opinion about the fund. On the one hand, it clearly underperforms its benchmark. But on the other hand, it seems a defensive investment strategy for times where the majority of funds head south. Its low turnover and volatility could potentially make it a stable investment in the long-run, but this remains to be proven. In the meantime, I will keep watching its performance while also having a closer look at its major holdings. These include for instance L’Oreal, Essilor, Hermes, Swatch, Statoil, PepsiCo or Pearsons – many of which have exhibited stable growth over the years.
