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A European equity fund that is based upon the tenets of behavioural finance investing. The approach is highly disciplined at all stages and its objective nature means the fund is always fully invested and constantly rotating to the areas found to be most attractive. Within its sector, the fund features in our 'Larger-Cap, Blend' category.
The fund’s KIID Synthetic Risk and Reward Indicator (SRRI) is 6. This is a regulatory measurement that is, where possible, calculated from the volatility of its weekly performance over a five-year period. A score of 6 means the fund’s historic volatility is between 15% and 25%.
The fund’s risk score is in keeping with the sector. The fund’s absolute and relative risk profile has tended to be at the higher end of the peer group range. This is in keeping with the objective nature of the process; it can participate for longer in markets backed by strong momentum and can also be impacted negatively by rapid changes in market conditions. Different share classes could have differing SRRI scores.
The fund is co-managed by Jon Ingram, Blake Crawford and Alex Whyte. All three managers are members of the International Equities Group which is organised into four sub-groups, namely, Style, Investment Research and Core, Portfolio Implementation and Unconstrained. Mr Ingram is head of the Dynamic sub-group, which sits within the Unconstrained strategies.
The team operates according to a common and clear investment philosophy which is that attractively valued, high quality stocks with positive momentum outperform the market. More specifically, they believe that: financial markets are inefficient, providing opportunities that they can exploit; such inefficiencies are persistent because they are driven by behavioural biases that can remain in place for a long time; the evidence is that sustainable outperformance can be achieved by investing in stocks that are highly attractive, are of high quality and have positive momentum. By combining these styles of value, quality and momentum, they believe they can outperform on a more consistent basis than other actively managed funds and through different cycles.
The fund typically features in excess of 50 stocks and is not constrained in its positioning versus the benchmark. It can also invest across the market cap range. Position sizes tend to be equal, but stocks with more limited liquidity may have lower weights. Continuous monitoring ensures that the portfolio is exposed to the three styles of value, quality and momentum.
The investment process is disciplined and has been carefully engineered and refined over time. It is bottom-up in nature with equal importance placed on the tasks of stock selection, portfolio construction and trade execution, given their aim to ensure that the value from stock selection is not diminished by inefficiencies at later stages of the process.
Stock selection is undertaken by reviewing the Europe equity universe (approximately 1,200 stocks) for the attributes of value, quality and momentum. A stock's value is determined by its value relative to the market and its peers using value measures such as price/earnings ratios and other relevant measures. They also seek to ensure that a company is fundamentally sound and therefore is not cheap for a reason. In terms of quality, they seek companies that are profitable, have sustainable earnings and have management teams with good capital disciplines. Analysis is undertaken on the cashflow statement, the balance sheet and returns on invested capital. With regard to momentum, they look for stocks that are supported by positive earnings momentum and positive price momentum. They compare companies based upon consensus earnings upgrades/downgrades and share price momentum.
Formal documentation, including the fund prospectus and the KIID, should be sought directly from the asset manager. For ease of reference, a link to the ASSET MANAGER WEBSITE can be found above, as well as a link to the ASSET MANAGER FACTSHEET.
At The Adviser Centre, our primary aim is to support financial professionals in their fund selection and suitability work through independently-minded research, borne of decades of industry experience. Our process is framed by the fundamental concepts of “quality”, “value” and “utility”, through which we answer the key questions of why to invest in a fund, how it is likely to behave and how it can be deployed.
The Adviser Centre team members are some of the most experienced in the fund research industry. We can always look forward to robust and constructive discussions and we have great respect for their views and perspectives, which, given the breadth of their fund and market knowledge, come from an extremely well-informed position.
We have known and worked with the team for several years and we value their experience and the insights they provide to our own investment process. The service differentiates itself by its more focused nature and the information on their factsheets is useful in emphasising a fund’s key mandate, exposure and style biases, helping to explain the risk/return journey that our customers can expect.
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