Gold Managers: Platinum International Fund

Kathryn Young  |  15/07/2016Text size  Decrease  Increase  |  

Kathryn Young: It's really the strength of their conviction in their absolute-return approach. They are benchmark-agnostic. So they build exposures wherever they see the best total return opportunities. Sometimes those positions can be a little tough to stomach. They can take a long time to play out in some cases and many managers will sort of cave under the pressure of underperformance due to those positions. But Platinum really has the strength of conviction to stick it out with those positions. We're also comforted by the thorough well-grounded research and common sense analysis that supports those positions and also their risk management. They are really careful about their approach to risk management. They diversify across many stocks to help reduce idiosyncratic risk. They also use short selling to damp volatility and they use active currency management to try to get on the right side of any big currency moves.

For starters, there's Andrew Clifford. He was one of the co-founders of Platinum and he remains their CIO. He manages 30 per cent of Platinum International now and he is a very capable investor in his own right. But there's also a new class of portfolio managers coming up through the analyst ranks and we're really happy to see that. For example, there's Clay Smolinski who recently took over the Platinum Unhedged portfolio. He built a very strong record at the Platinum European Fund. There's also Joseph Lai who manages Platinum Asia now and he is doing very well at that strategy and plays a big role in Platinum's overweight to the Asian region right now.

A Gold rating means that over the long term we think this strategy can outperform most of its peers and the relevant market benchmark. That long-term mindset is particularly important with regard to Platinum. Platinum's absolute-oriented approach means that often the portfolio and the returns will be quite different than the average peer and the broader market overall. That means that the fund can lag for some considerable amount of time. For example, it lagged markedly in 2006 but then went on to outperform strongly through 2007 to 2009. More recently, it's also been lagging, particularly in 2014. This is as a result of very strong overweight to Asian countries, particularly China and India, coinciding with the strong underweight to the US market, which has been strongly outperforming the other markets. We believe, we're confident that this is a really reasonable position that Platinum is approaching it with an appropriate risk management framework. So we're confident that it's going to play out. But it's really important for any investors in Platinum International to maintain a patient long-term mindset.

So despite Platinum's absolute-return orientation and the tendency to lag in some periods that I've discussed, we believe Platinum International can play a core role within any investor's global equities allocation. We believe that their diversified portfolio construction makes that an appropriate foundation to any investor's portfolio.

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