Around 400 stocks make it through to this stage and the managers maintain valuation models on these companies. They then combine their quant models with qualitative factors; macro awareness, investor expectations, relative strength, directors' dealings and earnings revisions to generate a buy, wait or sell decision.
They like to invest in companies with a margin of safety. If a stock's reward is outweighed by the risk, it will be sold.
Those stocks with buy signals and the highest conviction will make it into the final portfolio, which typically consists of 35-45 holdings. The fund has an ongoing charges figure of 0.9 per cent.
Generally benchmark agnostic, this fund has consistently outperformed the IA North American sector, returning 119.6 per cent vs. 104 per cent in the past five years; what makes this even more impressive is that it has garnered this performance despite being consistently underweight to the FAANGs. This makes the fund a really compelling offering, giving investors true diversification in the world’s largest economy.
Darius Mc Dermott is managing director of FundCalibre
