United States-based fund manager Vaughan Nelson, in partnership with Investors Mutual Limited (IML), has launched an actively managed exchange-traded fund (ETF) giving individuals an avenue to invest in global companies with small to medium capitalisation levels.
According to Vaughan Nelson chief executive and chief investment officer Chris Wallis, the new offering provides investors with the chance to benefit from a shift in fiscal policy by central banks to facilitate stronger economic growth.
“Passive indices will struggle relative to the returns they have generated over the last decade, while high active-share globally focused small/mid (SMID)-cap strategies can take advantage of the shifting economic growth dynamics,” Wallis said.
The new ETF will employ a high-conviction investment strategy in constructing an underlying portfolio of 70 stocks chosen from a small to mid-cap universe of 7700 shares across global markets.
The partnership enabling the launch of the active ETF has been made possible due to the fact both Vaughan Nelson and IML are affiliates of Natixis Investment Managers.
IML chief executive Damon Hambly pointed out the new fund will give Australian investors the opportunity to include equities in their portfolios that have previously difficult to access.
“It’s very difficult for Australians to invest in global SMID caps. This is the only active global SMID-cap ETF on the ASX (Australian Securities Exchange), and one of only a handful of global SMID-cap managed funds available in Australia. This is despite global SMIDs achieving excellent returns relative to other indexes, as well as being a great way for Australian investors to diversify their portfolios in terms of geographies, industry sectors and economic cycles,” Hambly noted.
“The ASX is only 2 per cent of the world’s market cap and is around 50 per cent materials and financials, so investors that are only investing locally are missing out on a lot of opportunity.”
Individuals can invest in the Vaughan Nelson global SMID-cap offering via the active ETF (ASX: VNGS) or through a managed fund employing the same investment strategy.''