InvestmentsMay 22 2015

Fund review: EFGAM Global Equity Conviction

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Fund review: EFGAM Global Equity Conviction

EFG Asset Management has launched a New Capital Global Equity Conviction fund, an open-ended equity fund that will invest in 40 to 60 global stocks across all market capitalisations. The fund will be managed by London-based equity manager Robin Milway.

It will mirror the approach of its European counterpart, the New Dynamic European Equity fund.

Available to UK retail investors, the fund is the 10th in the New Capital Ucits family, which is a range of high-conviction funds. The fund has a bottom-up approach and invests predominantly in developed markets globally with the MSCI World index as its benchmark (see below).

It aims to select stocks from sectors such as consumer staples, financials and healthcare and uses a top down geographic and sector analysis.

The management fees are 1.25 per cent with a minimum investment of US$10,000 (£6,300).

www.efgam.com

Comment

Run by a manager with 20 years’ experience, this fund is based on a ‘four pillar’ approach. It uses an analytic framework allowing the team to identify companies with excess cash flow used effectively, alignment of investors with shareholders, and offering durable growth in industries with positive dynamics and valuations.

The fund uses a bottom-up approach to stock selection and uses qualitative data to compare companies in different locations and sectors. These companies are then judged to see if they fit EFGAM’s approach.

The framework sees each stock receiving a score based on the company’s cash flows and management, as well as its growth prospects and intrinsic value, with the highest conviction stocks making it into the portfolio.

However, the fund has its own set of risks. Key among these is assets not being saleable immediately at a price consistent with that observed for valuation purposes. There is also the risk of exchange rate fluctuations due to the fund being denominated in US dollars.

Finally, there is a hedging risk. The fund utilises forward exchange rate contracts to minimise currency risk but forward contracts do not mirror movements in the exchange rate which can result in differences in performance between share classes.

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