Monthly commentary By Fund manager Andrew Dalrymple, Aubrey Capital Management Ltd
The outperformance of Aubrey Capital Management’s £36 million Global Conviction Fund over the past few weeks proves the power of active management, according to investment manager Andrew Dalrymple.
The strategy rose by 6.5% in the month to the end of July, eclipsing an ‘uninspiring’ 0.9% rise in the MSCI (GBP) World Index. So far this year Net Asset Value has risen by 30.6%, against a gain of 6.2% in the same benchmark.
Dalrymple said US stocks, led by broadcaster Netflix, accounted for the result. Netflix ended the month 22% higher after releasing strong subscriber figures, Facebook rose 12%, Align Technology11% and Euronet put on 10%.
Among US holdings, which account for 40% of the portfolio, only John Bean Technology and ULTA were lower. Following a recent research trip to America, the manager may look to replace these stocks with more rewarding alternatives.
In Asia, India had another very good month, with the stock market 6% higher. A good set of first quarter figures from Indiabulls Housing Finance was enough to send the shares up by another 10%; with broker upgrades, Eicher Motors rose 12%. The Hang Seng and Chinese stock indices both gained, but US-listed Chinese e-commerce ADRs powered ahead, led by Baozun, the e-commerce facilitator, which rose by 46% in July.
In contrast, while Europe was generally subdued, Ferrari defied Sebastian Vettel’s shrinking lead in the Formula One Championship and accelerated rapidly, (+19%). IT security firm Sophos ticked up by 2%, while reporting first quarter billings growth of 16%, doubtless boosted by recent cyber security attacks.
The fund remains fully invested and maintains an outlook of cautious optimism. At the heart of Aubrey's investment process is the use of a distinctive wealth cycle approach that aims to identify secular growth drivers that result in wealth creation.
Notes to editors
Aubrey Global Conviction Fund
The Aubrey Global Conviction Fund invests in growth stocks worldwide in a concentrated and index agnostic fashion, with the aim of achieving capital appreciation.
As the name implies, it often takes substantial positions in regions and sectors which the managers consider attractive, with the result that the portfolio disposition and performance is generally very different from the MSCI World Index.
Although unconstrained, the Fund tends to be mid-cap biased, and expects its companies to be producing earnings growth of at least 15% over a forecast two-year time horizon, have a 15% forecast return on equity, as well as being highly cash generative, with a cash flow return on assets of at least 15%. In addition to these quantitative requirements the managers emphasise management quality and track record, franchise strength, and competitive advantage. While many of the stocks in the portfolio pay dividends, it is not a priority in the stock selection process.
With such demanding growth requirements, the portfolio tends towards the higher growth regions of the world, and is generally overweight Asian markets, where excellent demographics and strong economies create an exciting backdrop. In developed markets, particularly the USA, the emphasis has tended towards the Technology, Biotechnology, and Consumer Services sectors. As a consequence, the portfolio is usually underweight in Europe and Japan.
Aubrey Capital Management – Website: https://www.aubreycm.co.uk/
Aubrey Capital Management Ltd is a specialist investment manager with a focus on global thematic conviction funds. Founded in 2006 and incorporated in Edinburgh, Scotland, Aubrey is a privately held company with all its shareholders actively involved in the business. The Aubrey team has collective investment experience of over 120 years in the UK, USA, Europe, Asia and Emerging Markets and an impressive track record of managing similar global funds in the past.
Compliance Notes
This article is specifically provided for use by media representatives in the UK. The views expressed are those of the fund manager at the time of writing, and may have since changed.
This document has been issued by Aubrey Capital Management Limited which is authorised and regulated in the UK by the Financial Conduct Authority. You should be aware that the regulatory regime applicable in the UK may well be different in your home jurisdiction. This document has been prepared solely for information purposes and is not a solicitation, or an offer to buy or sell any security. The information on which the document is based has been obtained from sources that we believe to be reliable, and in good faith, but we have not independently verified such information and no representation or warranty, express or implied, is made as to their accuracy. All expressions of opinion are subject to change without notice.
Please note that the prices of shares and the income from them can fall as well as rise and you may not get back the amount originally invested. This can be as a result of market movements and also of variations in the exchange rates between currencies. Past performance is not a guide to future returns and may not be repeated.
Aubrey Capital Management Limited accepts no liability or responsibility whatsoever for any consequential loss of any kind arising out of the use of this document or any part of its contents. The use of this document should not be regarded as a substitute for the exercise by the recipient of his or her own judgment.
Contact
John Morgan, Fortuna Asset Management Communications Ltd.
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EM: john@fortunaamc.co.uk
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