Foster Denovo Group Limited today announces the successful transition of two of its Sequel OEIC funds to a world equity sector allocation mandate and a real assets mandate. These two “smart diversification” funds are now actively managed by State Street Global Advisers, one of the world’s largest institutional asset managers.
The WS Sequel World Equity Fund is an actively managed fund that aims to outperform world equities by holding an overweight position in those world equity sectors where the managers see the greatest return potential, relative to a sector-neutral approach. This view will change over the market cycle, and provides a differentiated, smart diversification approach to world equity diversification, by eliminating sector concentrations that arise from a traditional market-cap weighted approach. “Sector rotation strategies” are a popular and established investment process, and the fund is thought to be the first of its kind in the UK to formalise this approach within a single fund. State Street has been a pioneer in the Sector ETF arena and the fund is powered by State Street’s active allocation approach, primarily using London-listed SPDR World Equity Sector ETFs. To ensure fair evaluation of the strategy, the fund is benchmarked against the Elston World Equity Sector Equal Weight Index: an index that measures the performance of world equities, but where each sector exposure has an equal weight.
The WS Sequel Diversified Real Assets Fund is an actively managed fund where the manager actively allocates to different “liquid real asset classes” including: commodities, gold, infrastructure, and property securities, depending on their relative return outlook. This provides an all-in-one real assets strategy for smart diversification across different alternative asset classes. The fund is built with SPDR and third-party exchange-traded products as building blocks for each exposure to allow for liquid, transparent access to those liquid real asset exposures. The fund is benchmarked against the Elston Strategic Real Assets Index which represents a strategic weighting scheme for liquid real asset exposures.
The project brought together expertise from Foster Denovo Group’s investment solutions team, Sequel Investments Limited, the appointed manager State Street Global Advisers, the ACD Waystone (WS) and proposition development support from Elston Consulting, which initiated the concept and also designed the indices for the two new strategies.
Declan McAndrew, Head of Investment Research, at Foster Denovo said:
“We wanted to further enhance diversification within our model portfolios by accessing specialist asset exposures and active allocation strategies that weren’t available from ‘off the shelf’ providers, so we went ahead and built our own with help from Elston Consulting. We are in a great position to be able to commission specialist portfolio construction solutions such as this for our advisers. We are delighted to be working with a world-leading asset manager such as State Street, to deliver better solutions at excellent value for our clients. Having appropriate options when it comes to the diversification of portfolios is a key area for us and these two funds provide useful, broader investment options for our advisers.”
Frederic Dodard, Head of Portfolio Management at State Street Global Advisers said:
“We are delighted that our Investment Solutions Group can support Foster Denovo and Sequel with the development of these specialist funds. We have long-standing experience both in sector equity allocation and real assets strategies, as well as the ability to implement those strategies in a liquid and cost-efficient manner. The UK wealth management market is a key focus for us and we welcome the opportunity to support firms with innovative fund solutions in this way.”
Collaborating with Foster Denovo, Sequel and Elston on the construction and management of smart diversification funds built with ETFs underscores our commitment to innovation, simplification, and service.”
Henry Cobbe, Head of Research, at Elston Consulting added:
“Our focus is on supporting UK advisers, so we are delighted to help bring together the practical experience of Foster Denovo’s Sequel Investments, the extensive resource at State Street Global Advisers, and our own research and development capabilities across portfolios, funds and indices for the creation of these established strategies within an innovative adviser-friendly fund format.”