James Sullivan, director at the firm says ETFs offer the chance to build greater conviction into markets such as Germany, Japan and the US for a significantly lower cost.
He believes there is “little value” in populating the rest of Coram’s three portfolios with actively managed collectives.
As such, he intends to steadily reduce the proportion of Oeics and unit trusts that make up the Coram Global Balanced Fund, currently around 30% of the fund, in favour of ETFs.
Around 40% of the listed assets within the balanced portfolio are invested in ETFs.
The growth of exchange-traded strategies allowed a “rifle approach” to investing rather than scattergun, allowing Coram to make the most of all the opportunities in a particular country or industry they have identified as promising, according to the former Miton manager.
The advancement of the exchange traded industry has allowed us to have greater precision with our strategy,” he adds.
“It is our desire to isolate as best we can, perceived value, rather than have that diluted away with broader exposures. Over diversification can often dilute performance and create propositions that lack conviction and direction.”
He believes overdiversification is a key risk for some global mutual funds, which Sullivan avoids due to their tendency to take control of asset allocation away from portfolio managers and hand over key decisions to a third party.