Investors in managed funds must ensure managers are sharing market and company information between i...
Investors in managed funds must ensure managers are sharing market and company information between international offices, warns Colonial First State Investments.
Mark Burgess, chief investment officer at Colonial First State Investments, told a Bloomberg conference that companies which took a traditional approach of physically separating fund research teams analysing companies in different countries could miss emerging trends in industry strategy, economic conditions and competitive threats that would affect performance of other geographic-specific funds.
Burgess said corporate earnings were increasingly derived globally, and locally-listed companies that may be held by a UK equity fund manager, were increasingly operating offshore and subject to industry trends that may be studied by an international fund analyst.
With slightly more than 50% of UK-listed companies' earnings coming from outside Britain, Burgess said information sharing was imperative. The importance was similar for investors in European businesses, who derived about 40% of their earnings offshore. However, he added that foreign companies such as US retailing giant, Wal-Mart, could also give hints as to future trends in retail strategy and marketing.
"Best practice can begin anywhere, so it is crucial all employees are feeding information to each other," he said.
He suggested UK investors could punish companies executing banking mergers badly, as was the case in the US in the 1990s. The restructuring trend had flowed from the US to Europe and now Japan. Yet the timing of global market and industry trends could still be affected by factors specific to local regions.
Religion could hold back Sunday trading in Germany, for example, but a German research team could provide insight on when seven-day trading might begin, while UK fund researchers could provide templates for changes in industry performance once Sunday trading began.