The fund has outperformed both the IA North America sector and its benchmark, the Russell 3000 Growth index, across three and five years, data from FE Analytics shows. It returned 126.86 per cent across five years to February 23 2015, against the sector average of 94.10 per cent and 118.62 per cent generated by the index. In the 12 months to the same date, performance of the fund has dropped off slightly as it delivered 20.86 per cent to investors, compared with 22.39 per cent by the sector and 26.08 per cent by the index.
He points out: “We don’t actively manage to a benchmark but instead look for the best sustainable growth stories that we can hold for years. As a result, our portfolio does not look like the market, which is currently reflected in an overweight to the energy sector. Due to our energy exposure, the sharp decline in the price of oil from $100 to less than $50 has had a negative impact on short-term performance. We have owned several of our largest energy positions for more than 11 years and remain confident in their ability to weather near-term volatility in commodity prices.”
Meanwhile, Mr Bauman thinks the portfolio has benefited from strong growth in healthcare and parts of the technology, media and energy sectors.
“Entering 2015, we expect a tougher period for equities broadly and a more difficult stock-picking environment,” the manager predicts. “The likelihood of higher interest rates and continued strength in the dollar should lead to more volatility. Nevertheless, we expect many of the trends that drove our portfolio companies this past year – such as innovation, share buybacks and merger and acquisition activity – could continue this year.”
EXPERT VIEW
Martin Bamford, chartered financial planner and managing director, Informed Choice
Offering first-quartile returns across three and five years, this is a fund that consistently adds value in an often challenging equity sector for active fund managers. The portfolio offers a long-term, buy-and-hold investment strategy – the managers attempt to identify influential firms in their early stages of growth, buy them and hold them. Sector and stock weightings are ignored during the portfolio construction process, which results in a high active share. For investors who prefer truly active fund management and a high-conviction approach, this is a great fund to consider.
