JO Hambro Capital Management (JOHCM) has launched the JOHCM US Small and Mid Cap Equity fund, adding to its existing Dublin-registered Oeic fund range.
Based in Boston – where the group has opened an office in the continuation of its US expansion – the fund looks towards taking a sector-based approach to investment. The fund will aim to apply the fund managers’ experiences in global sector research and portfolio management.
The portfolio is concentrated in ‘best ideas’, with between 45 and 60 positions. The largest position is set at 5 per cent. The fund will have a capacity of $5bn. The group has launched the fund because it believes there are currently “limited options” for UK investors interested in US-listed equities.
The A-share class carries an annual management charge of 0.75 per cent plus a performance fee. There will also be a B-share case, which has an AMC of 1.5 per cent plus performance. Both classes will be subject to a minimum initial investment of £1,000.
www.johcm.co.uk
Comment:
Investing in the US has typically been difficult. Unit trusts never live up to the hype and performance has never been outstanding.
This is due to the fact investing there tends to be more expensive, so after costs are taken into account the performance is no better than a standard UK equity fund.
This fund may be different due to managers being based in the country already – therefore eliminating any costs and timezone issues. It is clear from the standard minimum investment and annual management charge that this fund will be no more expensive than any other.
The group is right that there are limited options for UK investors to access US-listed equity funds. Sales for US funds have not been great over the past year either. According to IMA figures, average net outflows for the past 12 months to August stood at £16m – only Asia saw higher outflows.
Having a maximum of just 60 stocks in a US fund is not easy. The sheer number of listed stocks means the managers will have to have a very rigorous stock picking method. A small- and mid-cap focus to the fund is a benefit because the companies have more growth opportunities than large-caps. Although it should be noted small- and mid-cap in US stocks does not equate to other countries – companies tend to be much larger, with some small-cap stocks the same size as a UK large-cap firm.
