Canada Life fund manager Bimal Patel on delivering a positive customer journey through global equities
For Bimal Patel, a senior fund manager, global equities at Canada Life Asset Management, outperformance of a benchmark is important but so is delivering a “positive customer journey”. Talking about the Canada Life Global Equity Fund in the above video, he explains: “We are very much aware of the risk-adjusted performance of the fund and also trying to be aware of any drawdowns relative to the benchmark – and trying to limit those.
“So when we think about constructing the portfolio, we revisit the overall risk characteristics – the styles, the factors – and, essentially, we can add risk when we feel more convicted and we can reduce risk when we feel less convicted.” As an example, Patel points to 2022 and “a very large macro event”.
We are very careful to monitor 'make or break' stocks - large and volatile companies like Tesla or Nvidia – and, if required, to be very nimble in our positioning to them.”
“This was when the Fed decided inflation was no longer ‘transitory’ but slightly more persistent and we entered a very rapid rate-hiking cycle – and many of the growth stocks, particularly in the US, really struggled during that period,” he continues. “What we had done, though, was we had taken profits in many of these great stocks in 2021 so that, when that drawdown came in the markets, we were able to identify and buy some of those stocks that had valuation dislocations.
‘Make or break’ stocks
Asked about the investment philosophy underpinning the fund, Patel says: “We very much look at alpha – and alpha is unbiased. In other words, we can generate alpha by holding companies that go up; or being overweight them relative to the benchmark; or by not holding stocks that go down; or being underweight them relative to the benchmark.
“That might sound very simple but this very simple philosophy has helped us significantly over the last few years. After all, this is a period that has been characterised by the ‘Magnificent Seven’ stocks outperforming and it would have been incredibly difficult for the fund overall to outperform without some exposure to those stocks.”
For Patel, the nuance here is looking to identify what he calls ‘make or break’ stocks. “These are stocks that are both large and volatile – so think of companies like Tesla or Nvidia – and, as the name kind of suggests, they can very much dominate the performance of the overall funds. As such, we are very careful to monitor those particular stocks and, if required, to be very nimble in our positioning to them.”
You can view the whole video by clicking on the picture above. To jump to a specific question, just click on the relevant timecode:
00.00: What is the process and philosophy of the Canada Life Global Equity fund?
01.11: How has the process helped you to outperform consistently?
02.11: What are the differentiating factors of the Canada Life Global Equity fund?
