This is a new strategy for us although it has been around since 2005 and delivered strong returns during this period. It is an unconstrained strategy, so the holdings look very different to the benchmark. They focus on growth, but price is very important. Effectively they believe the terms “growth” and “value” are meaningless. They are looking for companies where there are tailwinds for growth, and they overlay strong value filters.
ESG is at the start of the process as they screen out companies, then they look at how profits are converted in to cash, the management of the company and how engagement is seen. They want to show conviction but are mindful of liquidity. So, starting levels are around 1% for the smallest companies and 3% for the largest companies.
Some of the larger holdings have done well for the fund, including Future, Next 15, Liontrust, TC, CVS Group and Tesco. They have had a busy period of moving around holdings, adding 16 names in 2021 and removing 13. This included 4 IPOs. They sold Jet2 which was a relatively new holding as the re-rating was quicker than they expected, and this has enabled them to invest into other areas….read more