This work is categorised in three main areas – growth, quality, and valuation - where each company gets a unique model depending on the risks identified. This gives each company an overall score of one to five to allow for a fair comparison before consideration in the final portfolio.
Stocks are chosen based on the best opportunities across all these factors. Position sizes are decided on the stocks’ liquidity and historic volatility to give the overall portfolio a good balance of reward and risk.
Stocks will be sold when they reach their target price, or the original investment case has changed. The final portfolio typically has between 80 and 100 names.
Mid-cap exposure means the fund will have a larger average cap size than many of its peers. Over the past five years it has returned 94 per cent with an ongoing charge of 0.8 per cent.
Aided by an experienced team, the in-depth process is the key selling point behind this fund. The strategy itself is tilted towards growth companies, but the valuation process means the managers will not overpay for them. We feel it is perfectly placed to tap into the opportunities in an unloved and under-researched area of the market.
Darius McDermott is managing director of FundCalibre
