We keep our Favourite funds list under constant review to ensure we have the highest conviction in the funds we’ve selected. Following a recent review, in the Global Equities sector we have taken the decision to add the WS Guinness Global Equity Income fund and the Schroder Global Sustainable Value fund to the list.
The WS Guinness Global Equity Income fund benefits from a disciplined investment process and an experienced management team, with long-tenured co-managers Matthew Page and Dr Ian Mortimer having run the strategy since its launch in 2011. We like the consistency and repeatability of their approach and feel the stability and longevity of the partnership is evident in the stability of the fund.
The investment process targets companies with strong balance sheets, consistent profitability and the capacity to grow dividends across a market cycle. The team look to avoid some of the pitfalls of chasing higher-yielding but lower-quality companies, as well as those industries exposed to heightened cyclicality, such as energy and mining. We value this balanced perspective on income, with dividends treated as an output of the investment process rather than a binding target. The result is a fund that yields more than the benchmark, but often less than other global equity income funds. Another key feature of the strategy is its equal-weighted approach to portfolio construction. This equal weighting gives each position the scope to meaningfully contribute to returns.
The resulting portfolio has exhibited a higher quality and defensive tilt versus the global equity market, with lower volatility and better downside protection than the benchmark and most peers.
The Schroder Global Sustainable Value fund is managed within a disciplined investment process that has been consistently applied over many years on a range of equity funds at Schroders. The fund is managed by Simon Adler, Liam Nunn and Roberta Barr, who form part of the long running value investment team at Schroders. We like the calibre of the team and the consistency with which their undervalued equity process has been applied.
The investment process combines quantitative screening to identify the cheapest 20% of companies in the market, with qualitative research to understand why these businesses are out of favour and whether there is genuine recovery potential. This naturally leads the team to a contrarian, long-term investment approach, with the managers willing to be patient while waiting for the wider market to recognise a stock's recovery potential. The resulting portfolio is high conviction, typically comprising 30 to 50 stocks, and will look, and perform, very different to the broader equity market.
Given the fund’s sustainable mandate, the managers also seek companies that they believe make a positive contribution to either the environment or society, while excluding those with meaningful involvement in fossil fuel extraction, tobacco and alcohol, amongst other areas.
Investing in stocks the team deem to be both sustainable and undervalued is a key differentiator to peers, given most sustainable equity funds invest in companies assumed to be faster growing, but more expensive. As such, investors should be prepared for the fund to look and perform very differently to other global equity funds managed within a sustainable mandate.
Alex Wickham: Research Analyst
Alex’s financial services career began in 2013 in our Dealing Team, where he held various roles – most recently Fund Dealing Manager. He then joined the AJ Bell Investments Team in 2022 as a Research...
