Tempo Global Equity Fund
This week Money asks Lonsec where to invest and their pick is the Tempo Global Equity Fund (APIR:HOW0156AU)
Tempo Asset Management is a new boutique manager within the Fidante Partners Limited stable (a member of Challenger Limited). Joe Bracken and Robert Chapman who previously worked together at BT Investment Management started Tempo in 2014 and their strategy stands out in a crowded market. They use computer models to select equity markets rather than stocks unlike most long only global equity strategies. The Tempo Global Equity Fund (APIR: HOW0156AU) invests at the country level (via equity index futures) rather than via individual stocks. It will typically invest across eight developed countries.
Further, the fund is constructed according to an 'equally weighted' approach leading to a maximum exposure to the US of 12.5%. Considered a form of 'smart beta', Tempo is seeking to improve the risk/reward outcome for investors by taking advantage of the diversification premium and the smaller country premium.
Lonsec assigned an "investment grade" rating at the initial review of the fund in July 2015. The fund's equally weighted, smart beta approach offers a unique, transparent and well-priced (0.55%pa) entry point to global equity markets. The investment team is small, but experienced in managing quantitative country selection strategies. The limited track record and the business risk associated with a start-up boutique investment manager are factors currently holding back the fund from a higher rating. Investors should also accept that the fund will exhibit a significant underweight to the US equity market.
Disclaimer: The Lonsec Rating (assigned July 2015) presented in this document is published by Lonsec Research Pty Ltd ABN 11 151 658 561 AFSL 421 445. The Rating is a "class service" (as defined in the Financial Advisers Act 2008 (NZ)) or is limited to "General Advice" (as defined in the Corporations Act 2001 (Cth)) and based solely on consideration of the investment merits of the financial product(s). In New Zealand it must only be provided to "wholesale clients" (as defined in the Financial Advisers Act 2008 (NZ)). Past performance information is for illustrative purposes only and is not indicative of future performance. It is not a recommendation to purchase, sell or hold Tempo Assett Management product(s), and you should seek independent financial advice before investing in this product(s). The Rating is subject to change without notice and Lonsec assumes no obligation to update the relevant document(s) following publication. Lonsec receives a fee from the Fund Manager for researching the product(s) using comprehensive and objective criteria. For further information regarding Lonsec's Ratings methodology, please refer to our website at: http://www.beyond.lonsec.com.au/intelligence/lonsec-ratings
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