Concentrating on equity rewards

GLOBAL

Stephen Anness, manager of the Invesco Perpetual Global Opportunities fund, argues a concentrated equity portfolio can achieve a better return than a more diversified approach.

As a global equity manager with an investible universe of over 20,000 stocks, we often ask ourselves: what is the optimum number of companies for a portfolio to hold? Our belief is that the more diversified portfolios become, the more likely a portfolio manager is to move towards market or benchmark returns. We have found that outperformance can be achieved through exhaustive research which helps us build high conviction in a limited number of stocks. There are several key reasons why a concentrated investment style has the potential to deliver clients a better long-term return than a...