Partner Insight: What makes a global equity fund stand out from the pack?

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David Dudding, manager of the Threadneedle Global Focus Fund
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David Dudding, manager of the Threadneedle Global Focus Fund

David Dudding, manager of the Threadneedle Global Focus Fund, reveals how the fund aims to differentiate itself from other quality-oriented offerings  

What are the key goals of the Threadneedle Global Focus Fund?

When I was running a European strategy, we used to say we run a "get rich slow" fund. It was about trying to find long-term sustainable compounders. With the global fund, maybe we are trying to get rich a little bit more quickly, because there is more growth in other parts of the world than there is in Europe.

But it's not huge returns we are looking for, it's consistency and downside protection. We are looking to outperform the market, but we would rather do it in small steps, rather than a return profile where we outperform by a huge amount in one year because of some lucky punches and give a bit back the next year.

What makes the fund stand out from other quality growth-oriented global equity funds?

Although we are predominantly a quality investor, we can look at areas that pure quality fund managers won't look at, and that means we can aim for outperformance from many different areas, for example in technology and financials. And it's all backed by the fact that we have a very large and strong research team across the globe, which makes it easier to join the dots together.

As well as competitive advantage, what are the other key things you look for in a company?

We also look for companies with improving competitive positioning - there's no use buying a company with great advantages if their situation is getting worse, as this will impact future returns.

Read Focus Guide Here

What are the key risks associated with your strategy and how do you manage them?

Valuations are definitely expensive. There is a lot of stock-specific risk, as it's a concentrated fund of 30-50 stocks and things can and do go wrong.

We are investing in a lot of big internet names and they obviously have regulatory risks. Companies like Facebook and Amazon and Alphabet. We find it easier to mitigate these risks when we have fewer names and we know more about them.

How big a potential problem is that regulatory risk?

The regulatory risk does loom large for us, as we are overweight some of the US internet names and tech companies. But we think a lot of these concerns are in the price and that these are great businesses that would be much more expensive were it not for the regulatory overhang.

We always try to understand what risks we are running and that we are comfortable with them - and we always expect the unexpected!

To read more from David Dudding on how the Threadneedle Global Focus Fund differentiates itself by seeking out firms with durable competitive advantages, click here.

This article was funded by Columbia Threadneedle Investments.

Key Risks

Investment Risk - The value of investments can fall as well as rise and investors might not get back the sum originally invested.

Currency Risk - Where investments are in assets that are denominated in multiple currencies, or currencies other than your own, changes in exchange rates may affect the value of the investments.

Effect of Portfolio Concentration -The Fund has a concentrated portfolio (holds a limited number of investments and/or has a restricted investment universe) and if one or more of these investments declines or is otherwise affected, it may have a pronounced effect on the fund's value.

Derivatives for EPM / Hedging - The investment policy of the fund allows it to invest in derivatives for the purposes of reducing risk or minimising the cost of transactions.

Volatility Risk - The fund may exhibit significant price volatility.

Important information

For use by professional clients and/or equivalent investor types in your jurisdiction (not to be used with or passed on to retail clients). Past performance is not a guide to future performance. The value of investments and any income is not guaranteed and can go down as well as up and may be affected by exchange rate fluctuations. This means that an investor may not get back the amount invested. Your capital is at risk.

Threadneedle Specialist Investment Funds ICVC ("TSIF") is an open-ended investment company structured as an umbrella company, incorporated in England and Wales, authorised and regulated in the UK by the Financial Conduct Authority (FCA) as a UK UCITS scheme.

This material is for information only and does not constitute an offer or solicitation of an order to buy or sell any securities or other financial instruments, or to provide investment advice or services.

Subscriptions to a Fund may only be made on the basis of the current Prospectus and the Key Investor Information Document, as well as the latest annual or interim reports and the applicable terms & conditions. Please refer to the ‘Risk Factors' section of the Prospectus for all risks applicable to investing in any fund and specifically this Fund. The above documents are available in English only and may be obtained free of charge on request from Columbia Threadneedle Investments at PO Box 10033, Chelmsford, Essex CM99 2AL and from www.columbiathreadneedle.com

Please note that the outperformance target may not be attained. Please refer to the Fund Objective in the appendix for further information regarding the Funds benchmark.

The mention of any specific shares or bonds should not be taken as a recommendation to deal.

The analysis included in this document has been produced by Columbia Threadneedle Investments for its own investment management activities, may have been acted upon prior to publication and is made available here incidentally. Any opinions expressed are made as at the date of publication but are subject to change without notice and should not be seen as investment advice. Information obtained from external sources is believed to be reliable but its accuracy or completeness cannot be guaranteed.

Issued by Threadneedle Investment Services Limited. Registered in England and Wales, Registered No. 3701768, Cannon Place, 78 Cannon Street London EC4N 6AG, United Kingdom. Authorised and regulated in the UK by the Financial Conduct Authority.

Columbia Threadneedle Investments is the global brand name of the Columbia and Threadneedle group of companies.

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