Pathfinder Launches World Equity Fund With Currency Twist

13 October 2011

Pathfinder Launches World Equity Fund With Currency Twist

Pathfinder Asset Management is pleased to announce the launch of the Pathfinder World Equity Funds, a unique set of funds offering investors exposure to global equities with a currency hedging ratio set by each individual investor. Pathfinder Asset Management Chairman Sandy Maier says the funds are unique because they give investors cost efficient and diversified access to global equities with the ability for each investor to select their own currency hedging ratio for their individual risk profile.

“The funds are designed for investors who want to choose their preferred exposure to the currency matching their risk appetite and currency outlook,” Maier says. Investors may choose to protect their investment from the volatility of NZ dollar movements by implementing a 100 per cent hedge. Alternatively they can opt for a low hedging ratio, depending on their appetite for risk and view on the currency. “This provides a tool for investors who want the flexibility of having currency exposure at some point of their investment timeframe while removing currency exposure at other times,” Maier says.

In the last 12 months the New Zealand exchange rate (when measured against the US dollar) has fluctuated between $0.72 and $0.88. This is close to a 20% range, without yet taking into account whether the investors’ underlying investment has gone up or down in value. Executive director John Berry says NZ dollar movements significantly influence global investment returns. “Fluctuations in the New Zealand dollar create investment gains when the dollar falls, and conversely losses when the New Zealand dollar rises. This presents investors with both risk and volatility. Many investors do not want gains and losses from currency fluctuations, but do not have the investment tools required to manage this.”

The funds are available through financial advisers who can advise their clients on a preferred level of hedging according to their risk profile. “Flexible currency hedging is not generally available to retail investors in New Zealand. We want to ensure that people are properly advised on currency by investing through an authorised financial adviser.” To assist, Pathfinder will publish its views on the currency outlook. The funds are split into two investment offerings. One fund assumes zero currency hedging (Fund U) while the second fund (Fund H) hedges against a range of currencies, reflecting the underlying equity exposure. Investors can select their desired after tax hedging ratio by holding a mix of Fund U and Fund H units.

On a monthly basis investors can, at no cost, change their mix and so adjust their currency hedge if their outlook on the exchange rate has changed. The fund’s benchmark is an Exchange Traded Fund holding shares in more than 1,000 companies that tracks the MSCI All Country World Index Fund. This is widely recognised as a leading measure of the performance of global equities across both developed and emerging markets.

Pathfinder will implement a “tactical index” approach to investing where from time to time weightings in the benchmark will be adjusted due to projected favourable relative performance in a particular geographic region or stock segment. The Fund’s initial allocations overweight Emerging Markets and the US, and underweight Europe and Japan and have a bias toward dividend stocks.

The minimum initial investment for direct investors is $10,000 with no minimum amounts for investors via a wrap platform. Pathfinder is a boutique fund manager specialising in efficient and “smart index” access to global asset classes for New Zealand investors. Pathfinder’s directors are Sandy Maier, Catherine Savage, John Berry and Paul Brownsey. Pathfinder currently manages a commodity fund and global water fund. ENDS

ENDS

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