AMP Capital has marked the three-year anniversary of the Global Companies Fund, its global equities UCITS fund, with an absolute return over the first three years to 31 March 2020 of 56.1 per cent net of fees, compared to global equity market returns of 4.6 per cent over the same period.
On an annualised basis the fund has returned 16 per cent per annum net of fees, versus the market returning 1.5 per cent.
The three-year track record is a key milestone for the fund and coincides with the Global Companies Fund securing one of the largest UK wealth managers as a cornerstone investor, taking the fund size to USD125 million.
AMP Capital, a global investment manager with USD143 billion in assets under management, established a London-headquartered global equity capability in June 2016 and launched the Global Companies Fund, its first global equities product, in March 2017.
The fund aims to deliver a compound rate of return greater than 10 per cent per annum, after fees and costs, over the long term, with a lower risk of capital loss relative to broader global equity markets.
Over the past three years, culminating in the Covid-19 events, the strategy has generated higher than market returns during the bull market whilst also protecting clients’ assets during the recent dramatic downturn consistent with the dual objectives of the strategy. Since inception the strategy has in total outperformed positive monthly market returns by 66 per cent and negative monthly market returns by 24 per cent.
The fund’s investment approach is long term, absolute risk (not benchmark) aware, concentrated, and offers investors full portfolio and process transparency. The long-only fund is managed collaboratively by the team of four Citywire AAA-rated investment managers located in London, Sydney and Hong Kong, led by Simon Steele, AMP Capital’s London-based Head of Global Equities.
Past performance is not an indicator of future returns.
Simon Steele, head of Global Equities at AMP Capital, comments: “When we developed this strategy, we wanted to challenge some of the ‘norms’ of equity investing, with a focus on client outcomes. Our mandate was to deliver a global equity product that focussed on delivering repeatable and highly attractive long-term risk-adjusted returns for our clients, and we only invest in companies that can demonstrably support that objective.
“We set ourselves a target to achieve annualised double-digit returns after fees through a full market cycle, a goal that has been realised as we mark the three-year anniversary of the fund. Only companies that we expect to maintain exceptional profitability over the long term and generate stable but superior growth in cash flows, year in year out, have earned a place in our portfolio. Over the past three years we have dismissed around 200 high-quality companies that might otherwise be seen as attractive investment opportunities.
“Many teams talk about collaboration – for us it is a core belief as to how we deliver the best outcomes for our clients. We invest substantial effort to ensure ongoing close collaboration and no stock enters our portfolio without the explicit support of all four of our investment managers (Andy Gardner, David Naughtin, Neil Mitchell, and myself).
“Notwithstanding the current crisis and its deeply painful near-term human and economic consequences, we remain clearly focused on our objective and continue to identify companies that we believe are exceptionally well placed to take meaningful economic share in the years ahead.”
The fund invests in a portfolio of 25 to 35 companies, selected for their strong wealth creation credentials through a rigorous and collaborative absolute risk aware investment process. The team believe that superior long term-wealth creation (the ability to compound cashflows at an above average rate persistently) sits at the core of a successful equity investment.
Steele says: “Wealth creation is characterised by strong competitive advantage, disciplined capital allocation and long-term structural pathways to growth, and we demand that all three pillars of success are in place before committing client capital to a long-term investment.”