The portfolio aims to deliver consistent absolute returns for investors over the long term, by investing in growth opportunities wherever they occur. Fundamental to this approach is the belief that companies with accelerating earnings growth will deliver the best absolute returns. This points the portfolio towards those areas experiencing high growth, or where growth is re-accelerating. The portfolio will be concentrated into 50-70 equity or equity related names while currency, options and convertible bond positions will be used to reduce risk. The fund will be long only with the ability to hedge out some market risk.

The Manager will use his experience of different market conditions to apply style tilts to the portfolio, as are appropriate for the stage of the economic cycle. He does not believe that a single style can effectively be used across all equity sectors at every point of the economic cycle.

The Process uses a combination of company contacts, screening, and macro economic analysis. Company visits are essential in order to find those companies with a suitable earnings profile, and to pick up macro economic trends. Over his many years investing, the manager has built up an extensive network of contacts. He does not believe in investing in a vacuum, so uses macro analysis to identify areas/sectors whose improving conditions will give a tail wind to growth.

Key areas of focus are:

• Accelerating Earnings Growth 
• Cyclical Recovery
• Positive Free Cash Flow
• Sustainable Competitive Advantage
• Positive Earnings Revision Yield
• Catalyst for Change

Once an interesting opportunity is identified, the manager must assess how much has been factored into valuations. A range of measures is used including:

• Discounted Cash Flow
• Discussion with sell side analysts
• Historic valuation ranges
• Cross border and in market comparison
• Price/Earnings to Growth ratios
• Alternate valuation metrics e.g. Enterprise Value/Invested Capital

The position is then scaled after considering potential return, liquidity and the opportunity set.

The fund is diversified across regions and sectors with a maximum of 50% invested in any single region (Region defined as; Asia ex Japan, Japan and Australia, North America, Latin America (including Mexico), Europe, Other Emerging markets). The portfolio will be concentrated into 50-70 equity names. Cash can be held up to 40% but for the vast majority of the time the portfolio will be fully invested and derivative protection can be taken out to further reduce exposure to market volatility.

The Sell discipline is as important as the buy discipline and the manager considers a stock for selling if one or a number of the following events occur:

• Stock reaches its target price and there is no new catalyst for further rises
• Unexplained underperformance
• Better opportunity elsewhere
• Key milestone in investment case not met
• Negative change in environment
• Change in liquidity environment
• Unexpected reaction to news