Global stock markets have been volatile and uncertain over the past three years due to the COVID-19 pandemic, Russia-Ukraine war, inflation, and tightening monetary policy. Though 2023 started off strong, the market remains unpredictable.
In this environment, strategies that claim they can adapt to market conditions seem appealing, and one fund that has a history of effectively navigating market conditions is the Bronze-rated AGF Global Select Fund.
It's Tough for a Fund to Be Agile
Though AGF Global Select stumbled in 2022’s fourth quarter, it has a long and impressive track record of shifting its portfolio according to market conditions. Its returns rank first in its Global Equity Morningstar category over three, five, and ten years through Jan. 31, 2023.
Manager Tony Genua focuses on industry leaders that gain market share from their rivals, but also tries to rotate toward those profiting from market trends. For instance, in mid-2020 when energy stocks suffered, Genua and his team bought Marathon Petroleum Corp (MPC), because they thought lockdowns and travel restrictions would not last forever, and energy demand would recover. Since then, through the end of January 2023 the stock jumped more than 67% annualized and remains a top holding, even though the manager trimmed it in the latter half of 2022.
The fund has made other profitable shifts, such as leaning into healthcare, and revisiting broker Raymond James (RJF) in early 2022, in anticipation of interest rate hikes. Most of the fund’s top picks since 2020 have helped rather than hurt performance.
The Keys to AGF Global Select’s Success
AGF Global Select’s success highlights three crucial lessons.
- A dynamic investment strategy does not necessarily require high turnover or trading. The fund’s 57% annual turnover rate is in the highest third of the Canadian Global Equity Morningstar category but implies a nearly two-year holding period.
- It’s hard to be flexible and successful without thorough research, a disciplined approach, and focus on high-quality investments.
- Experience matters when you’re picking and choosing stocks. Genua has run AGF Global Select for a decade and has the support of seven analysts with at least a decade of experience each. More than 20 quantitative analysts also lend a hand, and the investment team has suffered no departures in five years.
Overall, the strategy has demonstrated its ability to be nimble and capitalize on market trends, which is a rare feat in any environment. The fund is not for neophytes, but it’s worth considering.
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