For investors who want exposure to the global equity market through an active manager, finding a strategy with a five decade-long index-beating track record is rare.
However, the $14.4bn Capital Group New Perspective fund, currently run by seven named managers, seems to fit the bill.
Launched originally in the US in 1973, the strategy’s long-term success might be partly down to its ‘Capital System’ - where it combines the convictions of different managers and analysts throughout Capital Group to build portfolios.
“The Capital System essentially is designed give investors as smooth a ride as possible and to handle issues of succession,” explained David Polak, an investment director at Capital Group.
“With most systems, the problem you have is when the well-known lead manager moves on, the PR department, the marketing department and the sales department have to go in and persuade the investors in that fund that the new person is just as good – and maybe they'll hint slightly better.”
“We don't need to do that,” he added. “We will inform people of the changes, but succession is relatively smooth.”
Over the last 48 years, Capital Group New Perspective fund has had 20 portfolio managers, of whom seven currently serve the fund.
It seems this approach has paid off. An investment of $10,000 in Capital Group New Perspective in March 1973 would be worth $2.8m in March of this year, compared to $560,000 invested in the MSCI AC World Index.
Source: Capital Group
However, for investors to enjoy the effects of the compounded returns, they have stay invested in the strategy. Polak believes the ‘Capital System’ allows that to some degree by “smoothing the ride” over the short run.
This is done by having six to eight managers who look at the objective of the portfolio and the strategy through different lenses.
Polak said: “What we're attempting to do here is not get trapped in a style, not get trapped in a particular factor, not get trapped in a particular geography.
“So we have people in different parts of the world who have over their investment careers attacked investment opportunities in different ways and in different styles.
“They have different ages, they come from different backgrounds and they have different genders. What we're looking to bring to bear is cognitive diversity.”
Polak also pointed out that roughly 20 per cent of the portfolio is run by 80 analysts, who hold 180 positions, averaging to about two to three stocks per analyst.
“Serving the investors in New Perspective, you have today 87 investors - and that brings a great deal of cognitive diversity and smooths out the ride,” he said.
Jody Jonsson (pictured), one of the fund’s seven named managers, also believes the involvement of the analysts in the portfolio adds an edge to the strategy. 
“An important part of how we manage money is that the analysts are very much invested alongside the portfolio managers,” she said.
“This is important because analysts are not just consulting the PM’s on recommendations – analysts have the most at stake in any recommendation that they make and they are real true investors, instead of just opinion makers or advising the portfolio managers on their decisions.”
Polak added: “Our analysts have on average 15 years of tenure. They know their industries extremely well. By way of context, the average CEO in America has three years of tenure.
“That gives them a really deep insight into companies and industries, and we think having that direct investment decisions in portfolios is good for the end investor.”
He also argued that the analysts serve as a good “amplifier” for the investment theses of portfolio managers running the strategy.
“It's a terrific way of broadcasting and of reinforcing conviction,” he explained. “Imagine I'm a pharmaceutical analyst and I have invested in two pharmaceutical companies, and you're one of the portfolio managers interested in which is my highest conviction.
“Maybe of the two, one of those stocks I have as a 66 per cent weighting and the other one I have is a 33 per cent weight. You don't have to ask me [which I prefer]. You can see from my actions.
“Instead of me faffing around with trying to describe why I like one over the other, there's a purity to investing alongside portfolio managers.”
For the nearly 50 years that the Capital Group New Perspective strategy has been running, it has evolved as the global equity market has.
Polak (pictured) said: “In the 70s we had lots of oil companies. In the 80s, we had lots of consumer electronic companies. In the 90s we had combination of telecoms media technology. Then we had mining companies in the 2000s when China started to build out its infrastructure.”
In the last decade, the fund’s performance has been boosted by its exposure to the FAANGs. Its largest holdings are in Tesla, Microsoft, TSMC and Amazon. But with 302 holdings, the top 10 only make up about a quarter of the fund.
Despite having 302 holdings versus the almost 3,000 holdings in the MSCI AC World Index, Polak believes the managers don’t worry too much about errors of omission.
The strategy was one of the few global strategies that spotted the opportunity in Tesla as early as 2014, but has since trimmed its stake by about a third over the last several months. It was also an early investor in Amazon and has been gradually trimming that position since 2018.
Polak said: “If you worry too much about missing out on things, the structure of indexes or benchmarks today will give you a lot of angina because a lot of these platforms have become very big companies, and very big parts of the benchmarks.”
Indeed Apple, Amazon, Microsoft, Alphabet and Facebook, make up almost a quarter of the S&P 500 and form part of the top-10 holdings that make up over 15 per cent of the MSCI AC World Index.
Polak continued: “If you focus too much on that and getting those weightings right - you will probably miss out on all the other opportunities and many of those companies that end up being the little acorns that turned into the great oaks of tomorrow.
“If you spend your whole time looking at oaks, you're going to miss the acorns.
“You can spend your time being too focused on today's winners and miss out the opportunity to focus on tomorrow's winners.”
Over the last five years, Capital Group New Perspective has delivered a total return of 134.76 per cent compared to 98.72 per cent from the MSCI AC World Index and 93.74 per cent from the average IA Global peer.
Performance of the fund over 5 yrs
Source: FE Analytics
It has an ongoing charges figure (OCF) of 0.87 per cent.