Keeping in tune with European markets can make a key difference in your stock portfolio, and you’ve got to be bold if you want to see results.
That was the message attendees at RBC Trust Cayman recently hosted clients and guests to a reception at The Westin Casaurina Resort.
David Burnett, Partner with TT International Investment Management, introduced the group’s European-based stock portfolio, which has been showing exceptional performance in recent years.
‘The past few years have been marked by balmy conditions with strong global economic growth, subdued inflation and loose monetary conditions,’ said Mr. Burnett.
‘That has changed. US growth has moderated, inflationary pressures have risen and monetary conditions have tightened. However, Europe and Asia, including Japan, are still enjoying a cyclical upswing.’
And that’s the trend TT is committed to taking advantage of.
TT International is one of 14 word-class external money managers offered to Royal Bank’s discretionary investment clients within its multi-manager service.
Several years ago, RBC Global Private Banking made the decision to find the best managers worldwide rather than try to manage all the assets within the RBC group of companies in-house.
‘Our investment philosophy is that no one investment management firm could be the best in all asset classes, all styles, all geographies and through all markets’ said David Stewart, portfolio manager with RBC Global Private Banking.
RBC Global Private Banking built an internal team of eight manager selection professionals based in North America and Europe, complemented by external research from leading global investment consulting firms Mercer Consulting and Zephyr.
Mr. Stewart says the goal is not just to cherry-pick the managers who have the top historical performance over the long term.
‘The goal is to thoroughly understand what has driven that historical performance through intensive research, and also to select managers that protect capital when markets are negative, for instance from 2000 to 2002. This enables RBC to put the odds in their clients’ favour that these managers will out perform in the future,’ he said.
TT International is in charge of the RBC Regent European (ex UK) Equity pool, and boasts some impressive past performance numbers, which peaked the interest of reception attendees.
Over the one year period ending December 31, 2006 the total return was 31.7 per cent, which is a full 10 per cent above the MSCI Europe Ex UK benchmark.
‘At TT we follow a bottom up stock picking style – we are not afraid to look differently from the index and will invest in stocks we like. We don’t own stocks just because they are in the index,’ said Mr. Burnett.
Another important tenet of TT’s philosophy is to stay away from trouble by maximizing returns and minimizing risk.
‘Despite strong stock markets in 2006, companies in Europe still have strong fundamentals and reasonable valuations,’ said Mr. Burnett.
Mr. Stewart advises that the important thing to remember, however, is that a portfolio needs to be properly constructed.
‘This includes appropriate asset class and geographic diversification,’ he said.
‘So the best thing to do before making any investment decisions is to consult with a professional to ensure you are making the right decision for your unique circumstances.’