Global Select Fund (JOGIX)

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Fund Description

Fund managers Christopher Lees and Nudgem Richyal believe stock markets are inefficient and aim to exploit market anomalies via an investment process that combines both top-down and bottom-up research. Their distinct “4-Dimensional” investment process (stocks, sectors, countries, time/change) focuses on the behaviour of each share price to determine whether the most important driver of each prospective investment is stock specific, sector or country-based. The fund invests in both developed global (including the United States) and emerging markets, with the fund managers frequently drawing upon the stocks ideas generated by JOHCM’s regional equity teams.

Investment Strategy
  • Christopher and Nudgem have a Growth at a Reasonable Price (GARP) investment philosophy, which is sometimes described as core with a growth bias. They aim for consistency of returns by exploiting multiple market anomalies/inefficiencies.
  • Four-dimensional investment process (stocks, sectors, countries, time/change) with factors weighted to what actually drives each share price.
  • Growth and value disciplines are combined to help avoid the volatility that can occur in a single-style strategy, therefore to obtain better risk-adjusted returns over the medium and long term.
  • They look for stocks, sectors and countries that have displayed long-term underperformance (3 to 5 years) followed by short-term outperformance (6 to 12 months).
Investment Objective

The investment objective of the Global Select Fund (the “Fund”) is to seek long-term capital appreciation.

The Fund invests, under normal circumstances, at least 80% of its assets in equity securities of U.S. and foreign companies. The Fund can invest without limit in foreign securities and can invest in any country, including countries with developing or emerging markets. The normally will invest in at least three countries (one of which may be the US) with at least 40% of its assets invested in countries other than the U.S. However, the Fund may invest at least 30% of its assets outside the U.S. when market conditions are favorable. Typically, the Fund invests in a number of different countries. The Fund is not required to allocate its investments in any set percentages in any particular countries. The Fund may invest in U.S. and foreign companies of any size, including small and mid-capitalization companies.

The "Adviser" (J O Hambro Capital Management Limited) seeks to identify and make investments in U.S. and foreign companies based on a multi-dimensional investment process, considering a number of factors, including growth, valuation, size, momentum, and beta. The Fund utilizes a core style with a modest growth tilt (or “GARP”) over all capitalization ranges. The Fund seeks those stocks, sectors, and countries with positive earnings surprises, sustainably high or increasing return on equity, and attractive valuations.

  • Christopher Lees

    Senior Fund Manager

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  • Nudgem Richyal

    Senior Fund Manager

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Fund details

Data as at 31 October 2022
Fund size $281.21mn
Strategy size $3.42bn
Benchmark MSCI AC World NR
Share classes
Institutional (Launch date) 21-March-2013
Advisor (Launch date) 21-March-2013
Minimum investment
Institutional $1,000,000
Advisor $0
Fund codes
Fund Ticker Share Class Fund Number CUSIP
JOGIX Institutional 382 46653M708
JOGEX Advisor 182 46653M807
Fees and Expenses
Fund Ticker Share Class Net Expense Ratio* Gross Expense Ratio*
JOGIX Institutional 0.98% 0.98%
JOGEX Advisor 1.05% 1.05%

*Expense ratios as stated in the latest prospectus. JOHCM (USA) Inc. has contractually agreed to waive fees and reimburse expenses so that the Net Total Operating Expenses do not exceed the stated amounts until January 28, 2023.

Fund ratings

Data as at 31 October 2022
Morningstar Rating Rank
  Rank Percentile Rating
Overall Morningstar Rating™     3-Star
1 year 205/367 53%
3 years 151/308 47% 3-Star
5 years 152/272 56% 3-Star
Morningstar Category World Stock

Morningstar rankings are based on Share class I and on total returns. Past performance does not guarantee future results. © 2022 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. 

The Morningstar Rating™ for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.  Ratings are for the share class shown only; other classes may vary.  

Administration

Investment Adviser J O Hambro Capital Management Limited
Transfer Agent Northern Trust
Custodian Northern Trust

Investment Background

As at 30 September 2022

 

Strategy Highlights

As at 30 September 2022

The strategy underperformed its benchmark index in the third quarter. The MSCI All Country World NR Index fell 6.82% in US dollars in the quarter, bringing the year-to-date decline to 25.63%. This crisis is very different to anything we have seen previously as ‘safe haven’ government bonds have fallen along with equities. So much so, that this is the worst year for combined equity and bond losses in living memory. Inflation reached 40- year highs in many parts of the world, prompting central banks to hike interest rates much more than expected, leading to fears of a global recession and financial crisis. 

During the quarter the fund underperformed for three main reasons: 

1. We got interest rates wrong, expecting moderate rather than near-record rises;

2. Which meant we got the Net Present Value (NPV) wrong for our ‘offence’ growth stocks (eg too much duration in most sectors/regions); 

3. Which also meant we picked the wrong type of ‘defensive’ stocks (such as traditionally low beta healthcare) as the classic 60/40 asset allocation model that our portfolio construction is based upon stopped working when bonds and equities crashed together. As a result, we did not deliver our usual ‘relative downside protection’. 

What are we doing about it, and where are the new opportunities in this very different crisis? 

During the 3rd quarter we sold economically cyclical stocks with earnings risk due to increasing recession risk, stocks such as Nvidia, Micron, Ono, Lam and ASML in the semiconductor industry, Avantor and DSM in the healthcare and materials sectors respectively.

We purchased more economically resilient stocks such as Danaher, Envista, Perkin Elmer in healthcare, ANSYS, Epam Globant and Repligen, which are already down 50% YTD, plus Bank Mandiri and Bank Bradesco in emerging markets (Brazil and Indonesia respectively). 

Global Select Fund ‘4.0’ has started tiptoeing slowly into the following new ‘neighbourhoods’ where we see positive relative fundamentals and valuations, plus stabilising relative share price trends:

1. Quality growth stocks already down 50% year-to-date;

2. Emerging markets that are surprisingly outperforming the S&P500 year-to-date despite the strong US dollar (eg Brazil and Indonesia);

3. We will keep looking for the next opportunities when the US dollar turns. 

We think most equity markets are in a bottoming process, likely to be followed by a Q4 rally, then range bound 2023-2025 with risk on/off rotations as the dollar peaks. Our base case scenario is that this interest rate shock/crisis ‘valuation’ bear market is morphing into a recessionary ‘profits’ bear market (with the S&P500 already down 25% YTD) but not into widespread financial crisis/contagion, which would see markets fall by more than 50%, as in 2008. 

Our current scenario analysis is 50% bullish and 50% bearish. Short term reasons to be bearish include a recession potentially becoming a financial crisis/contagion. Medium term reasons to be bullish include the Fed regaining credibility with inflation/interest rates stabilising next year. 

Scenario 1 (35% probability): Equity markets rally led by 'quality growth' stocks. It’s probably nearer the end than the beginning of the Bear market for our Scenario 1 type of stocks, eg economically resilient quality growth stocks already down around 50% year to date. 

Scenario 2 (15% probability): Equity markets rally led by "cyclical value" stocks. It’s probably nearer the beginning than the end of the Bear market for Scenario 2 type of stocks because the recessionary earnings cuts are next, eg economically cyclical areas like commodities, and the “last person standing” areas of the equity market that have not sold off yet. 

Scenario 3 (50% probability): Equity markets keep falling if recession becomes financial crisis/contagion and policy makers do not react. Relative to benchmark, Healthcare is now the biggest position in the fund, as some of our Healthcare stocks are low beta (defensive) Scenario 3 type stocks, and some are high beta Scenario 1 type stocks.

Sources for all data: JOHCM/Bloomberg (unless otherwise stated).

Total Return (%)

Data as at October 31, 2022
  1 Month Total Return 3 Month Total Return YTD Total Return 1 Year Total Return Cumulative Since Inception
Advisor Shares Net 5.27 -10.39 -34.15 -32.33 101.04
Benchmark 5.25 -10.30 -34.10 -32.25 102.74

Annualised Return (%)

Data as at September 30, 2022
  1 Year 2 Year 3 Year 4 Year 5 Year 10 Year Annualized Since Inception
Advisor Shares Net -30.52 -4.74 3.24 3.10 4.74 7.03
Benchmark -30.43 -4.64 3.36 3.19 4.85 7.12

Monthly returns (%)

Data as at 31 October 2022
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
Fund 2013 1.20 1.58 1.46 -2.30 5.79 -1.39 6.96 3.34 4.05 4.48 27.75
Benchmark 2013 0.73 2.86 -0.27 -2.92 4.79 -2.08 5.17 4.02 1.42 1.73 16.15
Fund 2014 -1.97 7.12 -4.14 -0.99 4.55 3.49 -2.58 4.58 -1.65 -0.51 1.07 -1.46 7.06
Benchmark 2014 -4.00 4.83 0.44 0.95 2.13 1.88 -1.21 2.21 -3.24 0.70 1.67 -1.93 4.16
Fund 2015 1.62 7.08 -0.44 -1.07 3.99 -5.93 0.43 -8.91 -6.30 4.46 -1.37 -0.61 -7.98
Benchmark 2015 -1.56 5.57 -1.55 2.90 -0.13 -2.35 0.87 -6.86 -3.62 7.85 -0.83 -1.80 -2.36
Fund 2016 -3.49 -0.22 4.03 1.34 -0.83 2.38 4.49 -0.83 1.43 -1.58 -3.15 -0.99 2.27
Benchmark 2016 -6.03 -0.69 7.41 1.48 0.13 -0.61 4.31 0.34 0.61 -1.70 0.76 2.16 7.86
Fund 2017 6.65 -1.00 2.29 -0.35 0.98 0.84 4.40 1.78 1.07 3.07 0.43 2.80 25.22
Benchmark 2017 2.73 2.81 1.22 1.56 2.21 0.45 2.79 0.38 1.93 2.08 1.94 1.61 23.96
Fund 2018 7.28 -1.74 -0.31 -0.12 2.62 -1.75 0.93 -0.61 -1.19 -6.59 0.60 -6.21 -7.56
Benchmark 2018 5.64 -4.20 -2.14 0.95 0.12 -0.54 3.02 0.79 0.44 -7.49 1.46 -7.04 -9.42
Fund 2019 7.76 3.08 2.29 1.41 -4.51 7.24 0.53 -1.39 -0.45 0.21 2.85 2.22 22.70
Benchmark 2019 7.90 2.67 1.26 3.38 -5.93 6.55 0.29 -2.37 2.10 2.74 2.44 3.52 26.60
Fund 2020 0.19 -6.91 -10.11 12.13 8.51 2.79 6.74 4.24 -1.32 -1.70 12.18 5.10 33.43
Benchmark 2020 -1.10 -8.08 -13.50 10.71 4.35 3.20 5.29 6.12 -3.22 -2.43 12.33 4.64 16.26
Fund 2021 1.03 3.97 0.73 4.31 -0.20 2.60 2.01 2.45 -4.59 8.07 -1.05 3.86 25.16
Benchmark 2021 -0.45 2.32 2.67 4.37 1.51 1.36 0.69 2.50 -4.13 5.10 -2.41 4.00
Fund 2022 -12.05 -4.27 1.59 -10.74 1.70 -10.67 5.98 -5.91 -9.53 5.27 -34.15
Benchmark 2022 -4.91 -2.58 2.17

Expense Ratio (%)

Data as at February 28, 2022
Share Class Gross Expense* Net Expense*
Advisor 1.05% 1.05%
Institutional 0.98% 0.98%

Important Information

The performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data quoted. Investors may obtain performance information current to the most recent month-end, within 7 business days at www.johcm.com or by calling 866-260-9549 or 312-557-5913.

Returns shown, unless otherwise indicated, are total returns, with dividends and income reinvested. Returns for periods of less than one year are not annualized. Fee waivers are in effect; if they had not been in effect performance would have been lower.

The MSCI All Country World Index (ACWI) is a market-capitalization-weighted index composed of over 2,000 companies, and is representative of the market structure of 48 developed and emerging market countries in North and South American, Europe, Africa, and the Pacific Rim. The index is calculated with net dividends reinvested in U.S. dollars. Indexes mentioned are unmanaged statistical composites of stock market performance. Investing in an index is not possible. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.

*Expense ratios as stated in the latest prospectus. JOHCM (USA) Inc. has contractually agreed to waive fees and reimburse expenses so that the Net Total Operating Expenses do not exceed the stated amounts until January 28, 2023.

Top 10 holdings and active weights

Data as at 31 October 2022
Top 10 holdings
Nasdaq 2.68%
Vertex Pharmaceuticals 2.64%
Linde 2.57%
United Rentals 2.53%
TPG 2.51%
Novo Nordisk 2.50%
Tenaris 2.45%
AGCO 2.45%
Intuit 2.43%
Regeneron Pharmaceuticals 2.39%
Top 10 active weights
Nasdaq +2.64%
TPG +2.51%
Vertex Pharmaceuticals +2.50%
United Rentals +2.49%
Tenaris +2.45%
AGCO +2.45%
Morningstar +2.36%
Linde +2.29%
Chart Industries +2.29%
Ansys +2.26%

Regional / Country breakdown

Data as at 31 October 2022
Portfolio Benchmark Relative
Argentina 2.16% 0% 2.16%
Australia 1.89% 1.88% 0%
Brazil 2.16% 0.65% 1.5%
Denmark 4.74% 0.65% 4.09%
Indonesia 2.26% 0.23% 2.03%
Italy 2.45% 0.56% 1.89%
Japan 4.45% 5.21% -0.76%
Sweden 2.17% 0.81% 1.35%
United Kingdom 2.10% 3.69% -1.58%
United States 66.19% 63.01% 3.18%
Cash 9.38% 0% 9.38%

Sector breakdown

Data as at 31 October 2022
Portfolio Benchmark Relative
Health Care 27.19% 13.24% 14.00%
Information Technology 18.21% 20.90% -2.70%
Financials 15.85% 14.81% 1.10%
Industrials 9.39% 9.83% -0.40%
Materials 6.64% 4.63% 2.00%
Consumer Discretionary 4.45% 10.83% -6.30%
Energy 2.45% 5.80% -3.30%
Utilities 2.24% 3.03% -0.80%
Communication Services 2.17% 6.83% -4.60%
Consumer Staples 1.97% 7.56% -5.60%
Real Estate 0.00% 2.49% -2.50%
Cash 9.38% 0.00% 9.38%

Market cap breakdown

Data as at 31 October 2022
Portfolio Benchmark Relative
Large 72.17% 92.62% -20.45%
Mid 18.39% 7.37% 11.02%
Small 0.00% 0.01% -0.01%

Important Information

Fund holdings, sector allocation, regional allocation and top 10 countries are subject to change without notification.

Fund

As at noon Share class Currency CUSIP Number NAV Change Change % Previous
JOHCM International Select Fund 02/12/2022 Institutional USD 46653M849 21.05 -0.07 -0.33% 21.12
Investor USD 46653M823 21.03 -0.08 -0.38% 21.11
JOHCM Emerging Markets Opportunities Fund 02/12/2022 Advisor USD 46653M203 10.68 -0.01 -0.09% 10.69
Institutional USD 46653M104 10.71 -0.01 -0.09% 10.72
Investor USD 46653M302 10.68 -0.01 -0.09% 10.69
JOHCM Global Select Fund 02/12/2022 Advisor USD 46653M807 14.14 -0.01 -0.07% 14.15
Institutional USD 46653M708 14.19 -0.02 -0.14% 14.21
JOHCM Emerging Markets Small-Mid Cap Equity Fund 02/12/2022 Advisor USD 46653M500 11.41 0.04 0.35% 11.37
Institutional USD 46653M401 11.42 0.04 0.35% 11.38
JOHCM Global Income Builder Fund 02/12/2022 Advisor USD 46653M799 9.85 -0.02 -0.20% 9.87
Institutional USD 46653M815 9.85 -0.03 -0.30% 9.88
Investor USD 46653M781 9.84 -0.03 -0.30% 9.87
JOHCM International Opportunities Fund 02/12/2022 Institutional USD 46653M872 10.20 0.02 0.20% 10.18
JOHCM Credit Income Fund 02/12/2022 Institutional USD 46653M740 8.93 0.00 0.00% 8.93
Regnan Global Equity Impact Solutions 02/12/2022 Institutional USD 46653M716 7.44 -0.01 -0.13% 7.45
TSW Large Cap Value Fund 02/12/2022 Institutional USD 46653M641 14.74 0.04 0.27% 14.70
TSW High Yield Bond Fund 02/12/2022 Institutional USD 46653M658 8.67 0.01 0.12% 8.66

Important Information

The performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data quoted. Investors may obtain performance information current to the most recent month-end, within 7 business days at www.johcm.com or by calling 866-260-9549 or 312-557-5913.

Returns shown, unless otherwise indicated, are total returns, with dividends and income reinvested. Returns for periods of less than one year are not annualized. Fee waivers are in effect; if they had not been in effect performance would have been lower.

The MSCI All Country World Index (ACWI) is a market-capitalization-weighted index composed of over 2,000 companies, and is representative of the market structure of 48 developed and emerging market countries in North and South American, Europe, Africa, and the Pacific Rim. The index is calculated with net dividends reinvested in U.S. dollars. Indexes mentioned are unmanaged statistical composites of stock market performance. Investing in an index is not possible. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.

*Expense ratios as stated in the latest prospectus. JOHCM (USA) Inc. has contractually agreed to waive fees and reimburse expenses so that the Net Total Operating Expenses do not exceed the stated amounts until January 28, 2023.

12 Oct 2022

Q3 Video Update from Christopher Lees, CFA

Christopher addresses the past quarter and shares what he and Nudgem Richyal, CFA, are excited about moving into the new market regime.

    01 Oct 2022

    International Select Fund Quarterly Report

    The fund has started tiptoeing slowly into new “neighborhoods” where we see positive relative fundamentals and valuations, plus stabilizing relative share price trends.

      07 Jul 2022

      Q2 End Update with Christopher Lees, CFA

      "Beware good houses in bad neighborhoods..."

      10 Mar 2022

      International Select - Monthly Report

      Senior Fund Manager, Chris Lees, reviews the Ukraine invasion and his outlook and positioning for the future. 

      17 Mar 2020

      Think like a scientist - but which one and when?

      Updated probability-based scenario analysis from the JOHCM International Select team

      02 Mar 2020

      Coronavirus: indiscriminate selling makes for opportunity

      Thoughts on the coronavirus and the subsequent market correction from the JOHCM International Select Fund team. 

      27 Aug 2019

      Beating the machines - the Global Equity process

      How to beat the investment machines? Chris Lees, manager of the the JOHCM Global Equity Fund, discusses the change in investment process in recent years.

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