Quality is the cornerstone of our World Stars Global Equity strategy, guiding every investment decision we make. In recent years we have experienced an environment of significant volatility, marked by the Covid-19 pandemic, the subsequent acute supply chain constraints globally, the war in Ukraine, inflationary pressures, rapidly rising interest rates, a cost-of-living crisis and conflict in the Middle East. Throughout this period, it has been our commitment to quality that has set us apart and allowed us to generate strong long-term returns: 12% per year over the past ten years and in the top 10% of comparable funds globally, according to the IA Global.
At the core of our approach is the conviction that stock selection, rather than reliance on sector trends, or other factors, is the key to generating attractive long-term returns. Our portfolio is purposefully diverse, spanning sectors such as digital transformation, industrials, healthcare, consumer discretionary among others.
Our digital and technology holdings have capitalised on digital transformation and the rise of AI, while our industrials, a critical part of the portfolio’s success, have benefited from infrastructure investments and reshoring trends. Our stock selection process has ensured that we are not overly reliant on any single sector or theme. Instead, the diversity of our investments-combined with the focus on quality has allowed us to navigate the ups and downs of global equity markets with resilience.
We are proud that our World Stars strategy has delivered strong returns throughout this period. We are even more proud that our portfolio and risk analysis shows that these returns have been the result of stock selection, reflecting a fundamental ‘bottom-up’ investment approach that is also broad-based, reflecting diversification across themes and sectors. The chart below shows the total active return of the strategy since the start of 2020 and the effect of stock selection and factor returns on the overall performance of the strategy. What you can see is that it is all due to stock selection.
Looking in detail at the performance composition since 2020, the stock selection effect was positive for four out of the five years, reflecting the strength of our bottom-up approach and the diversification of our strategy. Most notably we have had strong consistent contributions from the information technology, communication services, industrials and consumer discretionary sectors throughout the period.
If we look at the top contributors by year, you can see the breadth of performance sources as holdings have been able to pivot and tap into opportunities that have arisen from this period of unprecedented volatility. In 2020, digital transformation holdings benefited from the surge in e-commerce and online advertising, the shift to contactless payments and at-home entertainment while crucially our life sciences holdings emerged as key solutions providers for testing, therapies and vaccines amidst the pandemic. We saw a continuation of these trends in 2021, complemented by an increased focus on the transition to net zero and infrastructure spending, especially within the US and Europe fuelling our industrial holdings. It was a more difficult year in 2022, given the sharp rotation away from growth stocks. We subsequently saw a strong performance by our industrial and consumer holdings, the former fuelled by a spike in defence spending globally amidst the crisis in Ukraine and with the reshoring of manufacturing emerging as a key geopolitical theme.