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By George Georgiev, CFA | 03-05-2018 10:00 AM

This Global Fund Favors High-Quality Large-Cap Growth Stocks

Bronze-rated Morgan Stanley Institutional Global Franchise has a large consumer defensive position and an 80% stake in wide-moat securities.

George Georgiev: Bronze-rated Morgan Stanley Institutional Global Franchise is a solid option for investors trying to gain high-quality equity exposure.

Lead comanager William Lock and team look for global companies that can consistently compound investors' returns. To them high-quality companies are businesses with predictable revenues and costs, as well as intangible assets, such as strong brands, copyrights, licenses, or networks that act as high barriers to entry. The fund's focus on competitive advantages is evident by the portfolio's more than 80% stake in securities possessing a wide economic moat rating per Morningstar's equity analysts. The fund's portfolio stands out in other ways, too. It has a significant stake in consumer defensive stocks.

The managers are absolute return investors and worry more about sustaining permanent losses than underperforming a benchmark or a category. The fund's high-quality leanings and large defensive stake have helped it hold up better in bear markets, such as the 2008 recession and the 2011 European debt crisis. The strategy can look out of favor during bull markets, but it has generally kept up and it easily makes up the difference in downturns.

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