Largest Fund
Malcolm MacColl, Spencer Adair, and Charles Plowden have managed Baillie Gifford Global Alpha Growth which carries a Morningstar Analyst Rating of Bronze, since its June 2010 inception and have been with the firm for an average of 23 years.
The managers follow Baillie Gifford’s tried and tested fundamentally-based, long term approach that seeks companies with competitive advantages and superior business models that generate above-average earnings growth.
The managers pay little regard to the sector and country weightings of their benchmark, and their purely bottom-up approach means the portfolio's exposures can diverge widely from the benchmark's. Investors should note that as a result, returns can be more volatile over the short term, but have proved strong over the long term, including on a risk-adjusted basis.
Best Performers
Morningstar Analyst Gold-rated Fundsmith Equity is managed by Terry Smith. His experience in the industry dates back to 1974 and has included time in research and in senior management positions at FTSE companies. Smith's investment philosophy is to buy and hold, ideally forever, high quality businesses that will continually compound in value. High quality companies are defined as having little leverage, an above average cash return on operating capital employed, and an ability to sustainably grow this rate of return.
When considering these criteria, and a minimum $2 billion market cap to keep the strategy scalable, the investable universe is significantly reduced to a shortlist of around 65 names for deep dive analysis. We consider the analytical resources well-equipped given the limited opportunity set and extremely long-term investment horizon. Investors should be aware that this is very high conviction and long-term approach.
There are elements of sector concentration – the approach excludes large parts of the market – and valuation risk in the portfolio, and returns may look at odds with the broad MSCI World index over the short term. We believe Smith has a good handle of the risks however, and over the long term will serve investors well.
Orbis SICAV International Equity is managed by the same team and using the same approach as Orbis SICAV Global Equity, assigned a Morningstar Analyst rating of Silver, but follows a global excluding-US equities mandate.
While William Gray is listed as its named manager, the fund is managed using a team-based approach. In practice, a small team of senior analysts are responsible for selecting stocks and driving the overall strategy. They form part of a larger team of regional and global sector analysts, located across key markets, who often have long industry experience, typically gained within the group.
The investment approach is long-term and focused on fundamental, bottom-up research that seeks to identify shares that are priced attractively relative to their intrinsic value. Key considerations include high-quality management, a solid track record of generating value, and a robust balance sheet. The fund can deviate significantly from its benchmark because of the contrarian nature of the approach, but performance has been driven primarily by the team’s stock selection.
A version of this article appeared in International Advisor magazine
