Duncan Goodwin joined Barings in January 2014 as the head of global resources and lead manager of Baring Global Resources Fund from Martin Currie Investment Management, where he was a lead global resources portfolio manager for nine years. With his arrival Mr. Goodwin replaced Jonathan Blake as fund manager of Baring Global Resources Fund. Since the change of a fund manager is always a critical topic for investors, Lipper took an opportunity to examine the changes in the fund management process during a face-to-face meeting with Mr. Goodwin.
According to Duncan Goodwin, one of the first things he implemented for Baring Global Resources Fund was a new benchmark. The change was from 60% MSCI AC World Metals and Mining Index/40% MSCI AC World Energy Index to the current 60% MSCI AC World Energy Index/40% MSCI AC World Materials.
Duncan Goodwin, Head of Global Resources – Barings Asset Management
Following Mr. Goodwin’s argument, this change of benchmark was necessary to give the fund a broader investment universe; the new investment universe has increased from 260 to around 400 companies. The broader diversification of the investment universe should make the fund more resistant to drawdowns in single-market segments as well as less dependent on developments in China. He said this broad approach is different from the management approaches of his competitors and will work best when single stock valuations are more important than macro drivers, which is typical in a less volatile market environment.
Mr. Goodwin’s stock selection process is based on the general assumption that the markets are not efficient, and he and his team are going to invest in the inefficiencies. In this regard, it is not surprising that fundamental research is key to identifying stocks where the growth potential is not yet recognized in the price. Duncan Goodwin has three analysts/ fund managers on his team who report directly to him, and he can also use the wider Baring research team to find companies to become candidates for the fund.
Asked what minimum investment horizon an investor who wants to buy Baring Global Resources Fund should have, Mr. Goodwin answered very openly that there will always be a fund in the investment universe that will outperform Baring Global Resources Fund over short-term periods. With regard to this, investors in the fund should have a long-term investment horizon, meaning holding the fund over a full cycle, to participate from the full potential of his management approach. The fund manager has a two- to three-year view of his investments and will not make any short-term calls because of market movements.
Since Duncan Goodwin took over the fund just a few months ago, data series for performance comparisons are too short term to make a valid evaluation. In this regard, investors should monitor the fund closely to see if he delivers the promised results.
Lipper’s Detlef Glow article is based on a one-on-one meeting with Duncan Goodwin, head of global resources at Barings Asset Management and fund manager, Baring Global Resources Fund, on July 31, 2014.