Industry clusters: the key to identifying economic strengths and opportunities

What is the Artemis Global Select Fund designed to do?

Alex: Quite simply, we aim for consistent outperformance, whatever the economic environment, in order to grow the money of our investors in real terms. Our approach is a conservative one, meaning that relative to our peers, we tend to be more defensive.

The fund's 60 stocks tend not to have much UK exposure. In a way, it serves as a one-stop shop for people's non-UK holdings. At its most basic, it's designed to keep up in bull phases and build in some capital preservation for the more difficult periods.

Do you have a common investment philosophy across the range?

Rosanna: We're looking for longterm growth trends. For example, the growth in tourism around the world or the move to reduce healthcare costs. When the three of us agree that we've found a sustainable long-term growth trend, we look for the best companies to express this trend and we put them on our shopping list. Locating high quality companies is the best way to exploit these long-term trends and only then do we look at the valuation. For companies to make it into the portfolio, they will need to fulfil our requirements of value: are they asset-backed and do they have a good cash flow?

What is the fund's risk-return point of difference compared to other global equity funds?

Rosanna: If you look at the history of the fund, our risk-return has been excellent. The way

we have been able to achieve this is through diversification. Despite holding around only 60 stocks, the fund is well balanced, with each position taking up 1-3% of the fund. One characteristic of the fund compared to other global funds is that we have a 12% exposure to Japan where there are companies currently trading below asset value with excellent growth.

One other way we try to get real diversification is by looking at the correlation of stocks within the portfolio. We aim to ensure that they are spread across different investment themes, thereby adding to the diversification.

Alex: I think the difference is a combination of factors. Our list of around 60 stocks allows us to be nimble and diverse, incorporating a combination of upside potential yet risk and correlation control. This is augmented by our valuation techniques, which, in addition to cashflow metrics, analyse the Asset Value of the business from the balance sheet. Finally, there is our combined experience. This is a team of three individuals and I have the least amount of experience but have now been running global equity funds for over 21 years. Together this combination gives us confidence that we can grow real wealth and guide investors through an economic cycle.

 

Click here to learn more about the Artemis Global Select Fund, whose sixty stocks are selected on their potential to grow and prosper, even in periods of economic contraction