Loomis Sayles Global Equity Fund Manages $93M but Trails MSCI ACWI Benchmark Since 2021 Launch

Fund Structure and Asset Overview of Loomis Sayles Global Equity Strategy

Operating as an active ASX-listed ETF under ticker LSGE and APIR code IML3289AU, the Loomis Sayles Global Equity Fund was launched on 1 October 2021. Managed by Natixis Investment Managers Australia Pty Limited (AFSL 246830) with Loomis Sayles & Company, L.P. as the investment manager, and Investors Mutual Limited (AFSL 229988) as responsible entity, the fund holds $93 million in assets with a NAV per unit of $1.92.

The fund targets a five-year investment horizon and distributes returns annually. Its management fee is 0.75% per annum inclusive of GST. The objective is to outperform the MSCI ACWI benchmark over a full market cycle, net of fees and expenses but before taxes. Both Zenith and Lonsec have assigned recommended ratings, reflecting professional endorsement of its investment approach.

Performance Lagging MSCI ACWI Benchmark Across Multiple Periods

Since inception, the fund has posted an annualized return of 8.92%, trailing the MSCI ACWI benchmark’s 12.83% by 3.91 percentage points. The underperformance is more pronounced over shorter periods. Over the last year, the fund declined by 7.41%, while the benchmark gained 16.99%, a 24.40 percentage point gap highlighting challenges amid market volatility and active management choices.

Over three years, the fund returned 13.66% annually versus the benchmark’s 18.11%, a 4.45 percentage point shortfall. In the past three months, returns were 6.08% compared to 13.62% for the benchmark, lagging by 7.54 percentage points. The most recent one-month period saw the fund fall 2.89% as the benchmark rose 3.02%, an underperformance of 5.91 percentage points. These figures demonstrate that the active strategy has not consistently outperformed the passive benchmark since launch.

Concentrated High-Conviction Portfolio Focused on Technology and Consumer Sectors

The fund employs a selective, high-conviction investment style driven by proprietary bottom-up research that identifies high-quality companies with sustainable competitive advantages trading at meaningful discounts to intrinsic value. Annually, approximately 30 companies are analyzed, with only a select few making it into a concentrated portfolio of 30 to 45 holdings, resulting in lower turnover compared to many active peers.

The top ten holdings represent 53.5% of the portfolio, heavily weighted toward technology and growth stocks. Alphabet leads at 8.7%, followed by NVIDIA at 6.8%, Meta Platforms at 6.2%, Amazon.com at 6.1%, and Tesla also at 6.1%. Other notable positions include MercadoLibre (4.7%), Shopify (4.1%), Novartis AG (3.7%), Arm Holdings (3.6%), and Boeing Company (3.5%), reflecting the manager’s conviction in select secular growth opportunities.

Sector Allocation Shows Significant Divergence from Benchmark

The fund is materially overweight in Information Technology and Consumer Discretionary sectors while underweight in defensive and financial sectors relative to the MSCI ACWI benchmark. Information Technology comprises 24.1% of the fund compared to 32.1% in the benchmark, Consumer Discretionary is 21.7% versus 8.7%, and Communication Services stands at 21.6% compared to 7.8%, indicating a strong tilt toward internet, digital media, and telecommunications companies.

Conversely, the fund underweights Financials at 7.0% versus 16.2% in the benchmark and Consumer Staples at 3.2% compared to 4.7%. The fund holds 2.5% cash and has no exposure to Energy, Materials, or Real Estate sectors, while the benchmark allocates 3.5%, 3.6%, and 1.6% respectively. Health Care and Industrials represent 12.0% and 7.8% of the portfolio versus 8.3% and 11.0% in the benchmark.

Geographic Concentration Strongly Skewed Toward North America

The fund’s geographic allocation is heavily concentrated in North America, with 73.9% of holdings domiciled in the US and Canada, compared to approximately 46.9% in the MSCI ACWI benchmark. This reflects the investment manager’s conviction in North American market opportunities. Asia and the Non-European Union each account for 6.0%, the European Union 6.5%, the United Kingdom 5.8%, and Latin America 1.8%. There is no allocation to Africa or the Middle East.

By revenue exposure, North America remains dominant at 46.9%, followed by Asia at 20.8%, Latin America at 9.8%, the European Union at 9.0%, and the Non-European Union at 4.5%. This revenue breakdown reflects the global earnings profile of the portfolio holdings. The fund’s strong North American focus contrasts with the broader geographic diversification of the benchmark, underscoring a strategic preference for developed North American markets.

Annual Distributions and ETF Accessibility for Investors

The Loomis Sayles Global Equity Fund pays distributions annually, offering investors a regular income stream. As an ASX-listed ETF, it provides liquidity and intraday trading capabilities through brokers, though its modest $93 million asset base may limit trading volume compared to larger ETFs.

Investors can access detailed quarterly updates on holdings, performance drivers, and outlook via the Loomis Sayles website. The management team provides ongoing commentary on portfolio changes and strategy, supporting investor understanding of active management decisions. Client support is available through email and telephone channels for inquiries related to investments, performance, and fund operations.

Investment Philosophy Focused on Long-Term Value and Quality Selection

The fund’s investment philosophy mirrors a long-term private equity approach despite its public ETF structure. The team targets companies with high quality, durable competitive advantages, and growth potential, buying when these firms trade at significant discounts to intrinsic value. This involves rigorous analysis of roughly 30 companies annually, with only a select few included in the portfolio.

This disciplined process results in a concentrated portfolio with lower turnover than typical active equity funds. The focus on fewer than 50 holdings emphasizes quality over momentum or technical factors, balancing risk and return potential. The five-year investment horizon reflects a patient capital approach aligned with private equity principles applied to public markets.

Professional Ratings and Fund Evaluation

The Loomis Sayles Global Equity Fund holds recommended ratings from Zenith and Lonsec, two leading Australian independent research agencies. These endorsements indicate the fund’s suitability within its category for investors seeking global equity exposure. However, ratings may change based on performance, strategy shifts, or rating criteria updates. The fund’s recent underperformance relative to its benchmark could impact future assessments.

Prospective investors should review the fund’s Product Disclosure Statement (PDS) and Target Market Determination (TMD), available on the Loomis Sayles website or via client support. These documents detail investment objectives, risks, fees, and suitability, essential for evaluating alignment with individual financial goals and risk tolerance.

Risks and Performance Considerations for Investors

Equity investments, including in the Loomis Sayles Global Equity Fund, carry risks including potential loss of principal. While the fund aims to outperform its benchmark, returns are not guaranteed and may be negative. The concentrated portfolio of 30 to 45 holdings increases exposure to individual security risk, and the heavy North American and technology sector weightings add geographic and sector concentration risk.

Past performance is not indicative of future results. The fund’s underperformance since inception highlights sensitivity to market cycles and investor sentiment. Its value-oriented approach may lag during periods favoring momentum or growth investing, as seen in the recent one-year results. Currency fluctuations affecting non-Australian dollar assets may also impact returns for Australian investors.