Why would you describe this fund as a 'one to watch' and how could the strategy work in investors' portfolios?
We would be hesitant to describe ourselves as ‘one to watch' since the company and the philosophy have been around for over thirty years and Seilern has pursued the same strategy of building concentrated portfolios of the best Quality Growth companies and holding them for the long term.
Instead, investors should view Seilern World Growth Fund in the same way as we view the constituent companies: durable and consistent.
The Quality Growth companies that we seek out for the portfolio have the right balance of earnings growth and defensiveness that enable them to weather difficult market environments. We want companies with proven business models that we can buy and hold without fear of unexpected surprises.
We do not rotate or tilt style. We do not believe in market timing or star portfolio managers. We diligently and rigorously pursue the same philosophy and strategy, seeking out the best companies with this balance of earnings growth and defensiveness. We select these companies precisely because they can get through difficult situations, and therefore our funds will be able to get through certain difficult situations.
Can you give a brief overview of your strategy in terms of what you are trying to achieve for investors, your investment process and the make-up of the investment team?
We manage three funds at Seilern which all follow the same strategy. Our philosophy rests on the fundamental principle that earnings drive share prices. We are looking for those companies that can grow their earnings sustainably, over the long term. At the same time we want these companies to have defensive characteristics which prevent them from incurring a permanent loss of capital. To help us identify these companies, we have created Seilern's Ten Golden Rules, which are the set of growth and quality characteristics which a company must display in order to be considered for the Seilern Universe and funds.
There are not that many companies that meet all these strict criteria and finding them is no mean feat. As a result, our Universe of investible companies only consists of 50 names, and it would never have more than 70. This is to ensure that we only include the highest quality names and so that each of our seven analysts has enough time to cover their companies to the level of detail we require. This is one of the things that sets us apart from other funds. By reducing the list of available companies to such a small number, the Universe becomes both the key driver of performance and the major risk management tool. It also enables us to maintain a consistent approach, reducing any key man risk or potential for style drift.
Can you identify a couple of key investment opportunities for your fund you are playing at the moment in the portfolio? This could be at a stock, sector or thematic level.
We don't try and play short term opportunities. Our approach is bottom up and long term, so our starting point is finding the best individual companies that can generate earnings and cash flow growth out for many years. This then enables us to hold them in the portfolios for as long as they sustain their competitive advantage and growth. Ideally what we are looking for is a company with a proven business model, with predictable earnings that can repeat their strong performance over many years.
Some may view these as boring, but we have the time to be able to assess that they can maintain their lead, and therefore compound returns, over a long period. A good example is a company like Accenture, which is only growing sales at 7-8%, but can do so consistently. While we don't look to themes as the starting point of our process, and certainly don't tactically play them in the short term, since we are looking for secular growth, there are various themes that reoccur in our funds. Ageing demographics in medical tech, growth in complex biological drugs and digital transformation are a few examples of these drivers that help propel our companies.
Disclaimer: This marketing communication is for information purposes only and does not constitute an offer or invitation to invest in any fund, security, financial instrument or product, nor a recommendation of any investment strategy.