This strategy was launched in 1999, followed by the launch of an Oeic version in 2008, with the aim of providing growing income with prospects for capital growth in the medium to long term by investing globally. Jim Stride has managed the vehicle since launch, with William Howard joining the team as deputy manager in February 2016. The fund has made it into this year’s Investment Adviser 100 Club. Mr Stride notes the fund was designed “for cautious investors to gain exposure to global equities and global “inflation-proof” bonds”.
The strategy of the fund focuses on a combination of global equities and global bonds, with a maximum of 60 per cent of the fund’s assets allocated to the equity portfolio.
Mr Stride explains: “The strategy was an extension of the [original] Distribution fund range from just UK assets – primarily equities and index-linked gilts. The central asset mix of the Global Distribution fund is 55 per cent global equities and 45 per cent global inflation bonds. This is a long-term approach designed to deliver a smoother approach than can be achieved through investment only in global equities.”
The managers use a proprietary stock-selection model to identify firms they believe to be attractive, relative to industry peers, based on the model’s analysis of the financial data. Mr Stride adds the investment process, asset mix and disciplines have all remained unchanged since launch.
The fund’s Z-accumulation share class sits at a risk-reward level of four out of seven, while ongoing charges are 0.76 per cent.
The Axa Global Distribution fund has outperformed its peers in the IA Mixed Investment 20-60% Shares sector across one-, three- and five-year time periods to September 21 2016. It has also delivered a 10-year return of 105 per cent, more than double the 48.8 per cent average return from the sector, data from FE Analytics shows. The strategy has outperformed the sector average in six of the past four years to the end of 2015.
Mr Stride says: “The portfolio is very well diversified at both equity and inflation-linked bond elements. At present the equity component has just below 500 stocks. The equity selection has a value bias in that the yield – at around 3.1 per cent – is higher than the global average with both a lower price-to-book ratio and higher earnings yield than the global average.”
The manager notes the geographic mix is weighted towards North America at 58 per cent of the portfolio, while Europe including the UK accounts for 24 per cent. The fund also holds roughly 9 per cent in Japan, 8 per cent in Asia ex Japan and a further 1 per cent in South America.
“The largest holdings tend to be US-based,” Mr Stride explains. “[This is] led by Alphabet, Johnson & Johnson, Pfizer, Apple and Intel, as of the end of August 2016.”
On the fixed income side he points out the inflation-linked exposure is through government bonds linked to the respective published inflation indices – for example the Retail Prices Index in the case of UK index-linked gilts. The portfolio holds inflation bonds issued from the governments of the US, UK, Australia, Canada, France, Germany, Italy, Japan and Sweden.
In terms of contributors to performance, Mr Stride notes the key drivers of the long-term performance “have been the exposure to US equities, the gains in inflation bonds following the waves of monetary easing by the major central banks, and the relative weakness of sterling on the foreign exchange market in the wake of the EU referendum”.