In a year when international markets have thundered along on the back of selected large cap stocks growth managers have been in vogue. Meanwhile, the value managers have struggled to beat their relevant benchmarks.

Tower Managed Funds national distribution manager Stephanie McGreevy says its returns have come back during the year as Morgan Grenfell has taken a conservative view of world markets, and it has had the fund underweight Japan - a market which staged a major rally late in the year.

"It has still done better than over half of its peers, mainly because of its higher weighting to the United States," she says. The fund's peers have been heavily underweight the US market."

Morgan Grenfell is an active manager that aims to add value through stock selection and asset allocation. Being a value manager Morgan Grenfell expects two-thirds of outperformance to come from stock selection, and one-third from asset allocation.

Its expectations are that stock selection will continue to deliver the largest proportion of return.

However, the Westpac International Equity Trust jointly won the global equity category with a different approach of using active country selection and passive stock selection.

Westpac chief investment officer David Beattie says the trust has managed to win the category without doing anything spectacular.

He says the fund is unusual in the way it is managed as Westpac was unable to find a manager who fulfilled all the bank's philosophical criteria when it launched the fund in 1991.

About 18 months ago it moved to a set-up where investment decisions are made on a country basis, as opposed to individual stock or sector selection. Stock selection is done on an index basis.

It appointed UBS Brinson, a value manager with a strong top-down input, to do the country selection for the fund.

Beattie says the trust currently holds more than 600 stocks so covers the MSCI index quite closely.

During the year Brinson has been underweight in the bullish United States market and overweight in Europe. Value has been added by being underweight in Japan as it hit rock bottom, then it upped its position in that market.

Beattie says further value has been added to the fund by WestpacTrust's currency management.

He says successful active international equity management is a big ask as the universe of stocks is so large.

Click here to go back.