And the winners of the Global Growth award are...
BEST LARGER FUND
1-year return: 17.1%
3-year return: 79.4%
A deep research resource and focus on best ideas has made T Rowe Price Global Focused Growth a consistent leader in its sector. A Rated Fund since 2017, it lifts the crown for the Best Larger Global Growth fund.
US-based David Eiswert has run this Luxembourg-domiciled £1.24 billion fund since 2012. He starts with an investment universe of 4,000 global developed and emerging markets shares. With the help of T Rowe Price’s vast team of analysts, he reduces his universe to 600 to 700 possible stock choices by seeking to identify companies with sustainable competitive advantages, market share gains, positive change dynamics and shareholder-focused management teams.
He then looks at industry and company fundamentals, and stock valuations. Although selection of the right companies is his first priority, he also considers macroeconomic and local market factors. The result is a portfolio of 60 to 80 best ideas – companies with stable-to-improving business fundamentals and prospects for accelerating returns on invested capital on a one- to two-year view.
The fund offers exposure to more than 15 countries. The US is its largest geographical weighting at more than 50%.
Eiswert has high conviction in the technology sector, where one quarter of the fund is invested. His focus is on identifying companies with product cycles that he believes will drive market share growth.
HIGHLY COMMENDED LARGER FUND
Fundsmith Equity has either won or been highly commended in this category for five years running. A Rated Fund since 2013, it was launched in 2010 by industry stalwart Terry Smith and has since grown to £17 billion in size on the back of its stellar performance.
His approach is to pick a small selection of high quality shares – 27 at present – and stick with them. He likes to buy long-established firms with big brands and other competitive advantages. The fund’s largest investments include household names such as PayPal, Microsoft and Facebook.
Smith believes it is virtually impossible to predict the direction of stockmarkets, but that the strength of the companies he holds will allow them to continue to grow their intrinsic value.
Winning blend of stock selection, macro and local factors
BEST SMALLER FUND
1-year return: 13.6%
3-year return: 52.6%
BMO Sustainable Opportunities Global Equity has produced higher returns with less volatility than many peer competitors, winning it the title of Best Smaller Global Growth fund in 2019. It has been under the radar of many investors, having amassed just £52 million, but its consistently strong performance and a growing focus on sustainable investing among retail investors make it a worthy newcomer to our awards. Nick Henderson and Jamie Jenkins have run the fund since early 2016 with a focus on sustainable investment themes. They aim to invest in 30 to 50 companies globally that are making a positive contribution to society and the environment.
The world faces material and ever-growing challenges, including poverty, inequality and climate change, which largely stem from living on a planet with growing populations and depleting natural resources. With such challenges come solutions, and the managers seek to identify and invest in quality businesses embracing and addressing these challenges. This, they believe, provides an opportunity for robust long-term risk/reward payoff.
The fund is currently invested in solution-providers addressing a number of environmental and societal issues, such as Xylem, a US water technology provider; Danish wind farm operator Orsted; HDFC, the Indian financial institution helping to provide access to finance, including the 190 million ‘unbanked’ adults in India; and Kerry Group, an Irish food ingredients manufacturer that is working with global food producers to reduce salt, fat and sugar content in food.
Idea generation comes through leveraging ideas from 50 fundamental equity analysts across BMO Global Asset Management.
HIGHLY COMMENDED SMALLER FUND
Threadneedle Global Extended Alpha is a close second in this category with similar returns with almost as little risk. Managers Neil Robson and Ashish Kochar have a quality growth bias that can extend long positions in favoured companies while shorting unattractive stocks.
When buying stocks they look for growth at a reasonable price. They believe that superior investment returns can be achieved by investing in companies with high or rising returns on capital. This is because the market underappreciates the value of competitive advantages and the potential for change.
When selling stocks they focus on three types of short positions: structurally-challenged companies, relative value opportunities and tactical shorts.
The fund has 90 positions in total at present – 65 long and 25 short.