PSigma’s Abate to adopt GDP benchmark in Global Equity fund

PSigma’s James Abate is set to use a GDP-focused benchmark in his new Global Equity fund, which launches on 17 June.

Abate will tilt the portfolio towards blue chip names in both developed and emerging economies which pump money back into their business as opposed to increasing dividend payouts.

The fund's individual stock weighings will be GDP-adjusted rather than based on a company's market capitalisation.

Abate said this will allow the fund to differentiate itself from other global equity funds in the marketplace which mirror the index.

"There are too many global equity funds from large houses which are index trackers and some of which are focused on one particular country," said Abate.

"The MSCI ACWI is a market capitalisation weighted index. It tells us only what the world equity market universe looks like today and thus it is very much a backward looking index.

"By using GDP growth as one of the key screens in the investment process, this will allow the fund to focus on the future rather than the past."

The portfolio, which has been seeded with £20m by an institutional investor, will comprise of 80-100 stocks at launch, with a focus on capital growth.

The fund will be diversified, investing in a range of countries, with the US 20% underweight at inception, while Europe holds a 12% overweight position.

The fund will be co-managed by Jing Sun who will specialise in the emerging market stockpicking.

Abate will invest 80% in growth stocks which are traditionally low dividend payers, such as Apple, while the remaining 20% will be exposed to stocks which return higher levels of income to shareholders.

"We would sooner invest in stocks like Apple which inject money back into their business to come up with new product ideas instead of increasing wealth for shareholders through increasing dividend payouts," said Abate.

"However, if there is a sustained decline in the worldwide economic recovery, we would be able to restructure the fund to benefit from the holdings that distribute higher levels of income and increase the 20% exposure."