For financial advisers and professional investors only – not for distribution to retail investors.
May 28, 2025
The Walter Scott Global Equity Fund is proudly brought to you by Macquarie Professional Series.
Long-term investors will need to learn to live with market uncertainty, according to global equity investment powerhouse Walter Scott.
The world order has turned upside down in the last few decades, with markets reacting to financial crises, political turbulence, geopolitical conflict, Covid, and now the potential for a trade war. It has also been a period of extraordinary technology disruption.
Despite this, equity markets have sustained an upward trajectory over time – with trade flows growing faster than economic growth rates.
“None of these unpredictable events have yet derailed the underlying tailwind equity markets benefit from. That is, the material conditions for humankind get better every day, everywhere,” says Walter Scott Executive Director Roy Leckie.
Speaking at a recent lunch for advisers, co-hosted with the Macquarie Professional Series, Leckie emphasised the role of global equity investments for long-term compound wealth creation.
“Being bearish has a very poor long-term track record,” he noted. “Equity markets capture growth momentum from new ideas and technologies.”.
Guest speaker Lionel Barber, former Editor of the Financial Times, also made the case for optimism at the event.
“If the 20th century belonged to America, the 21st century belongs to the Asia-Pacific,” he told the audience, noting that region also includes the United States.
Although volatility and unpredictability can be uncomfortable, it can also be a catalyst for positive reform. Barber described the potential for “decisive action” in Europe, such as a collective approach to defence, and economic reform in India.
This is not a time for complacency in investment decisions – and set-and-forget index allocations could miss potential alpha growth from these ongoing market shifts.
“The age of uncertainty is good for an active investor,” declared Barber.
Why passive alone won't weather the storm
While passive strategies may have enjoyed an easy ride under record-low rates and loose monetary policy, Walter Scott argues these uncertain times call for active investment management.
Over the last 30 years, Water Scott has navigated the highs and lows of global equity markets, through economic crises and persistent uncertainty. As active managers, its investment teams maintain a steadfast, measured, and disciplined approach, ensuring only the best ideas make it into their portfolios.
While noting the recent challenges to the Walter Scott Global Equity Fund’s performance, Leckie suggested now is not the time to “give up on active investing – but it has to be ‘true’ active. Only a third of active managers truly add value over the long -term”.
Leckie says three characteristics set those outperforming active managers apart over a full market cycle.
“First, they think about investing as a long-term undertaking. They're not trying to second guess what the market's going to do tomorrow. Secondly, they ignore the benchmark – because it’s a snapshot of yesterday”.
The third element, which Leckie says is most important, is their focus on superior fundamentals.
“They're aligning portfolios to companies with better growth prospects, higher return on invested capital, stronger balance sheets, different characteristics that speak to quality,” he said.
As well as analysing current financials, Walter Scott’s team looks forward. Analysts meet with customers, suppliers and partners to check the lived experience behind the company’s strategy, and understand its comparative advantages in terms of growth, innovation, agility and resilience.
Walter Scott is in the business of creating wealth for clients through the ownership of great businesses, rather than trading shares.”
– Roy Leckie, Executive Director, Walter Scott
Behind the scenes of high-conviction investing
Walter Scott investment manager Jamie Zegleman took the audience behind the scenes on how his team assessed these attributes for two stocks in the Walter Scott Global Equity Fund: MasterCard and Amphenol.
A familiar brand to Australian investors, MasterCard is an established presence in global payments. And it still has further potential to grow with innovations in micro transactions and contactless payments. These include tap-and-go transport payments and on-demand delivery.
“Eventually, the cash card story will play out, but MasterCard is already innovating to be ready when that happens,” noted Zegleman. “Every time you use your card, they capture anonymous data about the transaction, and they use that for fraud prevention, marketing and other value add services”.
Australian investors are less likely to come across Amphenol on a day-to- day basis, but this US-headquartered company is playing a critical role in technology interconnections from broadband communications and car sensors to aerospace and defence systems.
Amphenol’s decentralised business model defines resilience and agility, holding 140 independently-managed companies within the structure.
“They have autonomy to manage their own businesses – it’s an entrepreneurial culture that lets them ramp up quickly when opportunities arise and pull back faster in a crisis,” explained Zegleman.
Amphenol’s operating income has grown over six times since Walter Scott first invested in the company in 2009.
Playing the long game with patience and perspective
It takes time for compound growth to work its magic, and long-term investors may need to hold their nerve through this age of uncertainty.
“The most important thing is to build a portfolio that can weather these storms, with companies that are able to thrive when others might struggle,” said Zegleman.
Walter Scott looks for companies that are well aligned to long-term global growth vectors, particularly technology, automation and healthcare. With the precipitous decline in the cost of computing power, AI – and particularly generative AI – has seen significant investment growth. Coupled with this, automation (via physical sensors or embedded in software) is delivering faster, more personalised experiences across more complex transactions. And innovative companies are also solving increasingly challenging healthcare issues, including the rise of chronic diseases and keeping aging populations healthy.
It takes a disciplined valuation approach to avoid jumping on potentially over-hyped stocks in these growth sectors. And this is where the combination of patience and conviction should win over the long term.
As Australian investors increasingly look beyond the ASX for diversified growth opportunities, it’s important to remember the best companies are more likely to deliver real returns over the long term. It’s a lesson Walter Scott has provenover 30 years in the global equity markets. Buy with conviction, hold with patience, and watch the rewards compound over time.
The Walter Scott Global Equity Fund is designed for consumers who:
- are seeking capital growth and income distribution
- are intending to use the Fund as a core component, minor allocation or satellite allocation within a portfolio
- have a minimum investment timeframe of seven years
- have a high or very high risk/return profile for that portion of their investment portfolio, and
- require the ability to have access to capital within one week of request.
The Target Market Determination (TMD), available at macquarie.com/mam/TMD, includes a description of the class of consumers for whom the Fund is likely to be consistent with their objectives, financial situation and needs.
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