Rathbone Global Opportunities fund page

Back

Rathbone Global Opportunities

IA Sector:

Global

Asset Manager:

Rathbones

Asset Manager Website:

www.rathbonesam.com

Asset Manager Factsheet:

A developed market global equity fund whereby the managers are focused upon large and mid-cap companies with strong growth characteristics. In targeting growth companies with specific attributes, the portfolio has permanent sector biases. They also seek to temper overall portfolio risk by allocating to more defensive, stable growth names. Within its sector, the fund features in our 'Mid to Larger-Cap, Growth' category.

Opinion, Characteristics & Utility

Opinion

The co-managers of this Recommended fund are passionate growth investors and have a clear vision about the businesses in which they wish to invest.
The process has been honed over many years by the long-standing manager, James Thomson, and shaped by his experiences.
Their skills lie squarely in the ability to appreciate under-the-radar, long-term growth opportunities and combining these with more consistent businesses to achieve portfolio balance and mitigate risk.

Characteristics & Utility

The fund has a distinct growth profile and is invested in large and mid-cap stocks, with an overweight to the latter when compared to the index.
In keeping with the growth approach, there are structural sector biases. The fund is typically overweight in consumer sectors, technology and specialist financials. Conversely, underweights are found in banks, utilities, telecoms and commodities. In addition, there is little or no direct exposure to emerging markets or Japan. These characteristics alone mean that the fund’s positioning differs meaningfully from the index and many peers.
The allocation to more defensive, stable growth companies dampens the risk associated with pure growth strategies. Nonetheless, the fund’s volatility can be elevated when sentiment turns against growth stocks.
The fund is suited to long-term investors with a higher risk appetite who are seeking growth from developed market equities.

Risk Commentary

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%.

An SRRI score of 6 is not out of step with that of global equity benchmarks. However, the nature of the approach means that the fund’s risk/return outcome is likely to be variable compared to the benchmark, particularly in view of the sector biases. Furthermore, it is vulnerable to bouts of elevated volatility, particularly when sentiment towards growth as a style turns negative. Different share classes could have differing SRRI scores.

Description

Investment Team

James Thomson joined Rathbones after graduating in 2000 and has been involved in the management of the fund since 2003. He works alongside co-fund manager, Sammy Dow, who joined the group in July 2014 with previous experience in equity sales. They draw upon inputs from both internal and external analysts.

Investment Philosophy

The managers seek to invest in under-the-radar and out-of-favour growth companies in developed markets, focusing upon businesses that have specific attributes, such as barriers to entry, scalability, entrepreneurial management teams and catalysts for share price improvement. Conversely, they avoid restructuring situations, companies that rely upon external factors for success, industries with structural headwinds and highly indebted, cyclical businesses.

Portfolio Construction & Risk Controls

The portfolio features 40-60 stocks and positioning is not subject to benchmark constraints. Indeed, there are certain sectors and regions in which significant investments will not feature; these include emerging markets, traditional energy companies and banks and insurance. New holdings are introduced at 1.5% and the maximum stock position is 4%.

Investment Process

This is a stock-picking fund that is focused upon innovative and scalable growth businesses with the potential to become larger companies in time. The first stage in the process is to conduct high level fundamental analysis of companies, using what they call their “secret sauce” framework. This is primarily qualitative in nature and creates a focus for their more detailed work. Thereafter, they meet company management, before scrutinising the valuations of companies that are of greatest interest. Here, the main aim is to identify companies that have reasonable valuations, combined with earnings upgrades and the scope for multiple expansion. Whilst acknowledging that, when it comes to higher growth companies, the assessment of valuation can be more an art than a science, they avoid very highly-valued companies where they believe the opportunity is already recognised by the market.

They are flexible in their approach to company size, although the sweet spot is typically in mid-sized growth companies in developed markets. They avoid direct holdings in emerging markets as they do not believe they have the required information edge. In order to temper the portfolio’s overall risk profile and volatility, they hold a so-called “weatherproofed” allocation (around 20%) to stocks that are less economically sensitive and have steadier growth prospects. The sell discipline is deliberately objective, with changes in the investment thesis and/or valuation issues triggering a sell signal. In short, if there is doubt, they are most likely to act quickly to exit a position.

Key Fund Facts

Inception Date:

09 May 2001

Manager(s) (Since):

James Thomson (Jul 05)

Sammy Dow (Dec 19)

Fund Domicile:

United Kingdom

Base Currency:

£ Sterling

Fund Benchmark:

FTSE World and IA Global

IA Sector:

Global

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.