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Your stake in international equities

Approximately 20% or more of our diversified portfolio options have investments in international equities.

Generally, when it comes to equities, you benefit from the income distributed by the businesses held by your super portfolio generate (dividends) and returns on the investment when the share price increases (capital growth). When it comes to international equities, another factor that needs to be taken into consideration is currency risk associated with the change of prices for different currencies.

We adopt a two pronged approach to managing your stake in international equities:

  1. We monitor your international equities portfolio as an individual ‘sector’ with its own expected return target and risk parameters and strategy for achieving that target. (And good sector strategies are connected to the overall investment philosophy.)
  2. We keep a close eye on how the asset class works in harmony with others that make up your entire portfolio. This helps to realise the intended diversification benefits while looking for strategic opportunities to either ‘grow’ or ‘harvest’ investments to capture value.

Sophisticated analysis backed by specialist investment managers

Putting together an appropriate set of investment managers that match our goals is a serious business. We put as much work into picking investment managers for your portfolio as they do in picking the individual stocks.

Why do we go to so much trouble? Because choosing a careful combination of specialist managers with distinctly different mandates helps us to both diversify your investments and meet expected return targets.

We use the deep research capabilities and skills of our investment consultant to identify specialist managers and the role they play in the overall portfolio. In addition to their detailed analysis and ongoing monitoring, They hold hundreds of regular face-to-face meetings with the investment managers who look after your money.

The key word here is “specialist”. We’ve chosen investment managers both for their quality and fit for our investment goals, but also for the way they work together with minimal role duplication.

Our investment managers are either passive or active in their style.

Passive managers invest in a representative portion of the main stock indices (such as the MSCI-World or S&P 500) and aim to deliver returns equal to those indices. These passive managers give us broad market exposure and are cost-effective.

Active managers add value by looking for undervalued stocks and usually aim to beat the relevant index. They also use frameworks and methodologies that aim to reduce volatility – they form the core of our international equity managers.

Our active investment managers are also specialists by geographic region. Your international equities assets are largely weighted towards OECD countries, including the United States, United Kingdom, Japan, Switzerland and France. Together, these countries make up more than two-thirds of your international equities portfolio.

Right across our international equities stable, we have investment managers who are specialists in emerging markets and markets in established economies.

Your part ownership in international equities

Your stake in international equities gives you access to solid long-term growth with real diversification – enabling your super portfolio to access opportunities across global brands, industry sectors and regions that are not available locally. A sample of Mercy Super members’ total stake in global companies includes the following:

Microsoft $5.9m Time Warner $1.9m
Apple $5.8m Roche $1.9m
Johnson & Johnson $4.6m Intel $1.8m
Samsung $4.5m Unitedhealth Group $1.8m
Accenture $3.7m S&P Global $1.7m
Taiwan Semiconductor $3.4m Baidu $1.7m
Nestle $3.4m Merck & Co $1.7m
Novartis $2.9m Thermo Fisher Scientific $1.6m
Alphabet (Google) $2.9m Experian $1.6m
Visa $2.8m Alibaba Group $1.6m
Reckitt Benck $2.6m Bayer $1.5m
Ebay $2.6m Medtronic $1.5m
Bank Of America $2.5m Abbott Laboratories $1.5m
Glaxosmithkline $2.4m Facebook $1.5m
Oracle $2.3m Honeywell $1.5m
Twenty-First Century Fox $2.2m Sanofi $1.4m
Citigroup $2.2m Medtronic $1.4m
JPMorgan Chase $2.2m Monsanto $1.4m
Kirin Holdings $2.1m Pepsico $1.3m
Pfizer $2.0m

Estimated asset holdings shown are for illustrative purposes only and are based on fund-level sector assets at 30 June 2018 with proportional allocations for International equities held at 31 December 2017.

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