Breaking Free from Traditional Global Equity Silos to Unlock Long-Term Value
Skip to main content
pilogo-NEW
Subscribe
  • Subscribe
  • My Account
  • login
  • NEWS
    • Asset owners and the coronavirus
    • Alternatives
    • Consultants
    • Coronavirus
    • Defined Contribution
    • ESG
    • Frontlines
    • Hedge Funds
    • Investing / Portfolio Strategies
    • Money Management
    • Pension Funds
    • People Moves
    • Private Equity
    • Real Estate
    • Searches & Hires News
    • SECURE Act
    • Special Reports
    • WorldPensionSummit
    • Ron Schmitz
      Pandemic drives faster transition for Virginia to private markets
      Mubadala Investment Co. logo
      Mubadala draws on portfolio in coronavirus fight
      T.J. Carlson
      Texas Muni reduces downside risk during pandemic, finding opportunities now
      Scott Davis
      ‘Triage plan’ at Indiana system helped stem losses
    • H.I.G. raises $1.4 billion for latest credit fund
      James Zelter
      Private credit managers supersizing their loans
      Deborah Pederson and David J. Rothenberg
      Arena hires 3 to boost global marketing of private credit strategies
      BentallGreenOak agrees to acquire Metropolitan Real Estate Equity
    • Kieran Mistry
      Hymans Robertson picks head for new non-traditional risk transfer unit
      Troy Saharic
      NEPC brings on director of new business development
      Bill Foley
      Foley-backed SPAC agrees to $7.3 billion deal with Alight
      Jason Schwarz, chief operating officer of Wilshire,
      New owners have big plans for future of Wilshire
    • An American flag flies at the U.S. Capitol in Washington on March 6, 2021
      House expected to pass COVID-19 relief bill with multiemployer aid
      watch video
      5:39
      The coronavirus pandemic: One year later
      Gary Paulin
      Outsourced trading becoming side effect of virus for managers
      Logistics becomes shining star of investing during virus crisis
    • Michael Madowitz
      Taking a workforce break to raise children hurts retirement savings – economist
      Morningstar turns detective to find gender from 5500s
      David Blanchett
      Morningstar says women build better DC plans
      Desktop with document showing pie chart with investment types along with a calculator
      OECD proposes revision of its DC ‘good design’ roadmap
    • the United Nations building New York
      Tool gives investors insight into companies’ alignment with U.N. goals
      Preqin: Alts industry showing some progress on gender equality
      The tower of Stockholm City Hall rise above the city's skyline on Aug. 6, 2020
      Swedish funds managing $250 billion get slammed for ESG record
      Vapor rises from a petrochemical plant
      New York State Common inks more climate pacts
    • Roger Ferguson
      Finance museum honors TIAA's Roger Ferguson
      ERISA attorneys are taken to task by federal judge
      Springboard illustration
      LGPS Central execs to mentor U.K. students
      University of Washington/University of Minnesota
      Parametric creates quantitative fellowships for diverse students
    • Robert 'Rob' Shafir listens during a Senate Permanent Subcommittee on Investigations hearing in Washington on Feb. 26, 2014
      Sculptor hedge fund hits sixth straight year of outflows
      The WallStreetBets forum on the Reddit Inc. website on a laptop computer and the GameStop logo on a smartphone in an arranged photo.
      GameStop frenzy has hedge fund managers rethinking next moves
      Gabe Plotkin, chief investment officer and portfolio manager of Melvin Capital Management, speaks during the Sohn Investment Conference in New York on May 6, 2019
      Citadel, Point72 back Melvin with $2.75 billion after losses
      Shanghai skyline
      Global hedge funds struggle even in a more open China market
    • Washington Community Foundation picks SEI as outsourced CIO
      the United Nations building New York
      Tool gives investors insight into companies’ alignment with U.N. goals
      Dallas-Fort Worth Airport lands $23 million in 3 alts funds
      A logo outside the Greensill Bank offices in Bremen, Germany, on March 3, 2021
      Greensill files for U.K. administration after swift unraveling
    • A J.P. Morgan is displayed on a door in New York on April 14, 2009
      JPMAM lights up Project Spark to invest in diverse alts managers
      Marc Rowan, co-founder of Apollo Global Management, speaks at the annual Milken Institute Global Conference in Beverly Hills, Calif., on April 29, 2014
      Apollo-Athene merger billed as ‘natural progression’
      Andrew Morrison
      Janus Henderson chooses global head of client experience
      Jim Wiant
      Denmark’s Capital Four picks CEO to establish U.S. presence
    • NISA Pension Surplus Risk index inches up in February
      CalSTRS adds alts investments to ESG-themed portfolio
      District of Columbia Retirement Board executive director to retire
      Police car in the city of San Antonio
      San Antonio fund terminates Lazard from emerging markets strategy
    • Andrew Morrison
      Janus Henderson chooses global head of client experience
      Jim Wiant
      Denmark’s Capital Four picks CEO to establish U.S. presence
      Edwina Ho
      Cambridge Associates selects senior director for new Hong Kong office
      District of Columbia Retirement Board executive director to retire
    • The Charging Bull statue is covered in snow near the New York Stock Exchange on Feb. 11, 2021
      Bain: Private equity managers finish 2020 strong
      Carlyle secures $4.1 billion ESG-related credit facility
      Hamilton Lane raises $3.9 billion for fifth secondary fund
      PSG closes first Europe-focused fund at $1.5 billion
    • AEW chooses head of fund operations and debt finance
      Sebastiano Ferrante and Jocelyn de Verdelon
      PGIM Real Estate turns to staff to fill new roles
      European managers key in on specialist strategies
      Ingrid Jacobs
      Jones Lang LaSalle brings on head of diversity and inclusion
    • Jackie Walorski
      Contribution catch-up for caregivers gaining favor
      Neal and Brady
      Retirement security could be only issue both sides accept
      Retirement cartoon
      Hopes rising for retirement readiness in 2021
      Shawn O'Brien
      Annuities coming to target-date funds, but not right away
    • COVID-19: One year in
      Charging Bull, sometimes referred to as the Wall Street Bull or the Bowling Green Bull, a bronze sculpture that stands on Broadway just north of Bowling Green in the Financial District of New York City
      Top-performing managers Q4 2020
      P&I 1,000 largest retirement plans: 2021
      Retirement in emerging markets
    • U.S. still a key market for investors
      Collected coverage of P&I's 2020 WorldPensionSummit
      Pedestrians pass a large advertisement on the Arndale Center shopping mall reading 'Act now to avoid a local lockdown' in Manchester, England
      COVID-19 puts new opportunities and risks on the agenda - WPS panelists
      Screens display stock price information over the trading floor of the NYSE Euronext exchange in Paris
      Private assets will continue to grow in portfolios – WPS panelists
  • Data
    • Research Center
    • Searches & Hires Database
    • Searches & Hires News
    • RFPs
    • Charts / Infographics
    • Sponsored Research
    • Trackers
    • Q2 2020 searches and hires overview report
      Q2 2020 money manager M&A activity summary
      Q2 2020 legal overview report
      Q1 2020 searches and hires overview report
    • Washington Community Foundation picks SEI as outsourced CIO
      PennPSERs puts $375 million into 2 alts funds
      Dallas-Fort Worth Airport lands $23 million in 3 alts funds
      Enerpac Tool taps Fidelity as record keeper for 401(k) plan
    • Washington Community Foundation picks SEI as outsourced CIO
      PennPSERs puts $375 million into 2 alts funds
      Dallas-Fort Worth Airport lands $23 million in 3 alts funds
      Enerpac Tool taps Fidelity as record keeper for 401(k) plan
    • Emerging Markets Debt Mandate
      Emerging Markets Equity Mandate
      Investment Consultant
      Independent Investment Consulting Services
    • Taiwan Semiconductor’s No. 1 in the emerging markets book
      U.S. fixed-income returns post another positive year
      Nasdaq delivers an impressive year
      U.S. dollar's recent decline continues
    • Institutional Investors: Shared Expectations, Divergent Paths
      Global Investor Study 2016
      Workplace Financial Wellness
    • U.S. Endowment Returns Tracker
      Pension Fund Returns Tracker
      Earnings Tracker
      Corporate Pension Contribution Tracker
  • Insights
    • Opinion
    • White Papers
    • Industry Voices
    • Letters to the Editor
    • Partner Content
    • Publisher's Update
    • Vaccination cartoon
      Rallying to meet the ongoing COVID-19 challenge
      Tesla cartoon
      Don’t confuse wealth creation with retirement saving
      Top 1000 cartoon
      Top 1,000 retirement plans weather storm just fine
      Infrastructure cartoon
      You must go big on infrastructure, Mr. President
    • Investment Trends: Looking Ahead Across Equity Sectors
      Rethinking Market and Reference Data Management
      China is embarking on a new stage of growth
      Gold Outlook 2021
    • Sameer Shalaby
      Commentary: Why should investors care about treasury management?
      David Blitzstein
      Commentary: Without a national retirement policy, Americans face a future of pension crises
      Lawrence Cunningham
      Commentary: Gensler should keep Clayton’s pragmatic proxy adviser rules
      My-Linh Ngo
      Commentary: Pension funds and the role of the debt market in the fight against climate change
    • Writer using a typewriter
      OCIO industry needs to adopt GIPS
      Writer or journalist workplace. stock illustration
      Even as it assails China, Trump administration emulates it
      Skeptical of Main Street support for proxy adviser proposal
      Focus on manager diversity pushes asset owners’ to walk the talk
    • P&I Content Solutions
      Emerging Markets: Expanding Investors' View
      P&I Content Solutions
      How will gold react?
      To people shaking hands
      P&I Content Solutions
      Lessons From 2020: Today’s OCIO Model Passes a Major Test of Governance
      Sponsored Content By MassMutual
      Leveraging Data to Manage Risk
    • Help us help you by supporting quality journalism
      You Must Believe in Spring
      Everything Must Change
      Tomatoes & Investments
  • Multimedia
    • Videos
    • Webinars
    • Polls
    • Slideshows
    • Charts / Infographics
    • watch video
      5:39
      The coronavirus pandemic: One year later
      watch video
      0:45
      Private funds weathered 2020 turmoil
      watch video
      0:59
      Secure choice and other retirement plans at a state level
      watch video
      3:33
      P&I 1,000 by the numbers 2021
    • Emerging Markets: Expanding Investors’ View
      2021: A Fixed Income Odyssey
      ESG Capabilities and Climate Impact Investing
      Looking Beneath the Headlines – and Below Investment Grade – for Alpha Potential
    • POLL: Working after the pandemic
      POLL: The year ahead for the 1,000 largest U.S. retirement funds
      POLL: The Biden administration’s economic plans
      POLL: Retirement issues in 2021
    • view gallery
      9 photos
      Coronavirus and the markets
      view gallery
      22 photos
      The 1,000 largest retirement funds: 2020
      view gallery
      10 photos
      Outlook 2020
      view gallery
      10 photos
      2019 as seen through the eyes of Roger
    • Tradewatch for Q4 2020
      Graphic: Is it time for DC plans to embrace private equity?
      By the Numbers for February 2021
      Top Performing Managers of Domestic Taxable Bond, 4th Quarter 2020
  • Events
    • Conferences
    • Webinars
    • Defined Contribution Spring Virtual Series
      DC Investment Lineup Virtual Series
      ESG Investing Virtual Series
      Private Markets Virtual Series
    • Emerging Markets: Expanding Investors’ View
      2021: A Fixed Income Odyssey
      ESG Capabilities and Climate Impact Investing
      Looking Beneath the Headlines – and Below Investment Grade – for Alpha Potential
  • Careers
  • Research Center
MENU
Breadcrumb
  1. Home
  2. Partner Content
June 10, 2019 01:00 AM

Breaking Free from Traditional Global Equity Silos to Unlock Long-Term Value

By P&I Content Solutions
This content was paid for by an advertiser and created in collaboration with P&I Content Solutions.
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print

    The changing nature of global economic growth requires a new look at global equity investing, away from traditional silos based on region and capitalization size.

    “The case for global investing has changed, and it's no longer just getting exposure to different economic outcomes that might be less correlated with each other,” said Ken McAtamney, partner and portfolio manager of the $2.5 billion William Blair Global Leaders Strategy. “It's more about opening up a broad opportunity set to find the best investment ideas anywhere in the world, regardless of region or country of domicile or, frankly, any constraint that a narrower mandate might have.”

    McAtamney said that approach requires active stock selection from a global set of companies, with less emphasis on their location or market cap — elements that are traditional in other growth equity strategies. Having a portfolio that can access growth irrespective of its location, and constraining the manager to own only the best companies (companies that are true drivers of innovation and value creation), is the next stage in equity investing, he said.

    “Historically, investing in equities outside of the U.S. gave someone exposure to an economy that was maybe on a different cycle than the U.S. economy, a diversity of companies or regions of the world that might be moving out of sync with each other, so you got the diversification benefit,” McAtamney said. “And I think, in large part, that was the primary benefit you received when you invested outside the U.S. Today, that benefit has decreased because the world is more tightly integrated.”

    That change in view is the result of several decades of change in the world economy that has made the world “a much flatter place than it used to be,” McAtamney said. “What has happened has been a flattening of the global commercial market and higher correlations across different markets, as they're all trading partners with each other. Consumption habits in Asia that are increasingly similar to consumption habits in the United States, for example.”

    “And we see supply chains that are global,” McAtamney added. “Much has been made about the supply chain behind, say, a smartphone that might be designed in California, but the raw materials for that phone might cross borders between Asia and the U.S. several times before it becomes a finished product that can be shipped anywhere in the world.“

    Competition for companies has also intensified, he said, and “there's been a weeding out of the average and below-average companies, and weaker business models. I think the gap between winners and losers globally has been tremendous. And that could be in markets, but also, importantly, it can be across markets.”

    The nature of innovation and disruption is changing as well. “As equity growth investors, we're very attracted to companies that can innovate and change the economic landscape,” he said. “And what's clear is the nature of incumbency has changed — and there's that much more pressure from the competition than we've seen before.”

    Download PDF
    William Blair Investment Insights >

    'A bigger opportunity set'

    “I can't emphasize enough that we're trying to isolate the world's best companies — those companies that have the best products, the best services, have the most innovation and productivity around their research and development, the companies that are coming up with solutions for tomorrow,” McAtamney said.

    “This is the outcome of globalization, that all parts of every economy are basically open to competition from everywhere else. Presumably one would want a bigger opportunity set to choose from, rather than a regional constraint, U.S.-only or developed market-only or emerging market-only.”

    When looking for such companies, William Blair seeks “a favorable trade-off between our assessment of corporate returns, cash flow generation and growth, and what's expected by the market,” McAtamney said. The Global Leaders Strategy has a bottom-up view looking for the best companies wherever they're domiciled.

    Diversification by stage of development

    While the diversification benefit of investing outside the U.S. is less than it used to be, that doesn't mean diversification isn't important. The Global Leaders Strategy looks to diversify the portfolio by stage of development: emergent growth, expanding growth, and sustained growth.

    “We invest in companies that are younger and innovative and exciting,” McAtamney said, such as “emergent growth companies, expanding growth companies — those that are capturing market share and extending market leadership. But we also invest in companies that are more mature with lower growth rates for which we have a higher degree of confidence in the durability of the company's competitive advantage, therefore a higher degree of confidence in the longevity of that growth rate.”

    That differentiating strategy also applies to the need for long-term investors to diversify away from totally passive equity investing, a trend that has been growing among institutional investors since the financial crisis. That need is enhanced when dealing with growth equity, particularly on a global level, where long-term market expectations are less efficient, McAtamney said.

    “The market is pretty efficient about discounting short-term growth, but inefficient in making that long-term distinction between which company can grow more, which company can have higher profit margins, which companies can increase their market share, which companies can generate the most cash flow,” he said. “Over the long term, that's what an active investor needs to do.” And it's the long-term nature of the Global Leaders Strategy that particularly suits investors with long time horizons, such as pension plans, he added.

    Another emphasis that comes along with the search for quality growth companies is their adherence to environmental, social and governance standards, elements that are of growing concern for institutional investors. “I think there's a great deal of correlation between long-term corporate growth and long-term corporate performance, and we can be an important intermediary between asset owners and companies,” McAtamney said.

    Among the growth companies prime for investment, McAtamney said, are those developing technology for global payments systems, as commerce transitions from hard cash to electronic payments; companies developing systems to process and settle those payments; and business models that are based on subscriptions rather than outright purchases, where you pay as you go rather than all at once. Also of interest are companies that are in more “experiential” consumer products, such as health and beauty — sectors that are less likely to be negatively impacted by e-commerce, he said.

    Opportunities abound

    Regardless of sector, McAtamney said he is not concerned about the amount of global investment opportunities available in the future, although he also has no illusions about how difficult long-term investing has become.

    “I am worried about the fact that the dynamism around corporate performance has never been higher than it is right now,” he said. “And I think being in the predicting business has probably never been as challenging as it is today. But the nature of innovation and disruption, and companies that are doing new things and creating new things, is interesting to me. That's the opportunity for what we do.”

    Opinions expressed are those of the author as of the publication date, are subject to change, and may not reflect the views of other investment teams within William Blair. Factual information has been obtained from sources believed to be reliable, but its accuracy cannot be guaranteed. This material may include outlooks and forward-looking statements. Actual events may differ significantly from those presented.

    This content is for informational purposes only and not intended as investment advice or a recommendation to buy or sell any security. Investing involves risks, including the possible loss of principal. Diversification does not ensure against loss.

    This sponsored content is published by the P&I Content Solutions Group, a division of Pensions & Investments. The content was not produced by the editors of Pensions & Investments and www.pionline.com and does not represent the views of the publication or its parent company, Crain Communications Inc.




    SPONSOR DIRECTORY

    William Blair logo

    William Blair Investment Management
    The William Blair Building
    150 North Riverside Plaza
    Chicago, IL 60606

    active.williamblair.com


    Robert J. Duwa, Partner, CFA
    Head of North America Distribution
    312.364.8218

    [email protected]

    E-MAIL NEWSLETTERS

    Sign up and get the best of News delivered straight to your email inbox, free of charge. Choose your news – we will deliver.

    Subscribe Today

    Get access to the news, research and analysis of events affecting the retirement and institutional money management businesses from a worldwide network of reporters and editors.

    Subscribe
    Connect With Us
    • RSS
    • Twitter
    • Facebook
    • LinkedIn

    Our Mission

    To consistently deliver news, research and analysis to the executives who manage the flow of funds in the institutional investment market.

    pilogo-NEW
    About Us

    Main Office
    685 Third Avenue
    Tenth Floor
    New York, NY 10017-4036

    Chicago Office
    150 N. Michigan Ave.
    Chicago, IL 60601

    Contact Us

    Careers at Crain

    About Pensions & Investments

     

    Advertising
    • Media Kit
    • P&I Content Solutions
    • P&I Careers | Post a Job
    • Reprints & Permissions
    Resources
    • Subscribe
    • Newsletters
    • FAQ
    • P&I Research Center
    • Site map
    • Staff Directory
    Legal
    • Privacy Policy
    • Terms and Conditions
    • Privacy Request
    Pensions & Investments
    Copyright © 1996-2021. Crain Communications, Inc. All Rights Reserved.
    • NEWS
      • Asset owners and the coronavirus
      • Alternatives
      • Consultants
      • Coronavirus
      • Defined Contribution
      • ESG
      • Frontlines
      • Hedge Funds
      • Investing / Portfolio Strategies
      • Money Management
      • Pension Funds
      • People Moves
      • Private Equity
      • Real Estate
      • Searches & Hires News
      • SECURE Act
      • Special Reports
      • WorldPensionSummit
    • Data
      • Research Center
      • Searches & Hires Database
      • Searches & Hires News
      • RFPs
      • Charts / Infographics
      • Sponsored Research
      • Trackers
    • Insights
      • Opinion
      • White Papers
      • Industry Voices
      • Letters to the Editor
      • Partner Content
      • Publisher's Update
    • Multimedia
      • Videos
      • Webinars
      • Polls
      • Slideshows
      • Charts / Infographics
    • Events
      • Conferences
      • Webinars
    • Careers
    • Research Center