Our investment philosophy drives our CST and Global Equity portfolios. It is centered on our emphasis for building global, low cost, diversified, and transparent investment solutions.
Our driving philosophies for our portfolio mandates are:
- For long-term, multi asset class portfolios, only way to create meaningful returns over time is to have a good plan, and stick to it in both good and bad markets.
- For global equity portfolios, country selection provides ongoing return opportunities.
An important question for investors in the portfolio construction process is whether to go global or not. While most investors likely consider global investing, the majority of investors – regardless of their country of domicile – exhibit a well-documented and significant home country bias.
A country-centric approach to a global equity mandate, with exposure to both developed and emerging countries, can positively affect performance; therefore, investors should be aware of and understand the natural tendency to avoid going global. A shift in mindset and knowledge of the benefits of global investing can open an investor’s eyes to a larger investment pool.
De-synchronization of both fiscal and monetary policies between countries will likely increase cross-sectional volatility in various global markets. Along with the increased dispersion in returns, expect an increased opportunity set for investors seeking alpha through the country selection.
From an implementation perspective, the number of single country ETFs has increased in the past five years. With over 40 single country ETFs currently in existence – and the addition ETFs dedicated to single-country, small-cap stocks – choices are plentiful for country-focused investors. Investors are able to express their investment opinions with specific, targeted implementation vehicles that minimize single-security risk.
Our investment approach is focused on creating strategies that are low-cost, diversified, liquid, and transparent. The evolution of the Exchange Traded Fund (ETF) has given us the ability to achieve that within our clients’ portfolios.
In 2005, AGA pioneered the use of single-country ETFs to create global equity portfolios and currently hold one of the longest live track records in the industry for their strategies.
The use of single country ETFs provides:
Cost Saving:
By purchasing ETFs on the US market, investors realize significant savings over buying thousands of individual securities on local exchanges. The Funds represent very large aggregate portfolios and thus minimize the custody, reporting and transactions costs of operating in the local markets.
Diversification:
Through the purchase of a single ETF, investors can get targeted exposure to any asset class or investment theme. Because of the underlying diversification within each ETF, investors will minimize single-security risk.
Liquidity:
All of the ETFs that we use in our portfolios are screened based on their average daily trading volume as well as the liquidity of the basket of underlying securities. As a result of our focus on liquidity, we are able to more swiftly move between asset classes and themes.
Transparency:
All of the underlying securities within each ETF are made public. We regularly x-ray the portfolios to see all of our exposures and holdings
