JOHCM International Opportunities Fund (JOPSX)

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Fund Description

The JOHCM International Opportunities Fund is managed by Ben Leyland, senior fund manager, and Robert Lancastle, fund manager, supported by dedicated analyst Jasmeet Munday. The team seeks to generate high risk-adjusted returns with volatility below that of the broad market by focusing on high-quality, cash-flow-generative companies. They blend the best of quality investing with the best of value investing in order to avoid the two major sources of capital destruction at market turning points: overvaluation and overleverage. They prioritize businesses with strong franchises, strong balance sheets and the ability to create shareholder value by reinvesting in areas of competitive advantage, but they only commit capital where they see a favorable risk/reward ratio, i.e., limited downside and substantial upside on a 3- to 5-year horizon. They emphasize absolute rather than relative returns and are prepared to hold up to 20% cash in the fund when valuations are unattractive.

Investment Strategy

The team aims to deliver above-average risk-adjusted equity returns over the medium term. They believe this is best achieved by investing in a concentrated, unconstrained portfolio of attractively valued compound growth companies. They prioritize companies that are able to reliably generate cash flow and reinvest it at high marginal returns in order to grow their intrinsic value. As a result, the companies become more valuable over time. 

Investment Objective

The investment objective of the JOHCM International Opportunities Fund is to achieve long-term total return by investing in a concentrated portfolio of international equity securities. The Fund invests, under normal market conditions, primarily in equity securities of companies headquartered outside the U.S., including those in emerging markets. The Fund may invest in foreign companies of any size, including small- and mid-capitalization companies, in order to achieve its objective. Equity securities include common and preferred stocks, rights and warrants. The Fund may also invest in equity related instruments, such as equity linked notes and participation notes, all of which derive their value from equities. Equity linked notes and participation notes will be securitized, freely transferable and the Fund will not be leveraged as a result of investing in them. The portfolio typically contains 25 to 40 stocks,* with position sizes of 2% to 5%. The Fund is benchmarked against the MSCI EAFE Index, but their process is benchmark-agnostic: The team aims to cluster exposure around particularly attractive areas and have zero exposure to overleveraged or overvalued areas of the market. The process is biased toward larger-cap (>$5 billion) multinationals listed in developed markets.
*The number of stocks in the portfolio will be fewer than 50.

  • Ben Leyland

    Senior Fund Manager

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  • Robert Lancastle

    Senior Fund Manager

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  • Jasmeet Munday

    Analyst

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An introduction to the JOHCM International Opportunities Fund

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Fund details

Data as at 28 February 2023
Fund size $1.91mn
Benchmark MSCI EAFE Index
Share classes
Institutional (Launch date) 30-September-2016
Minimum investment
Institutional $1,000,000
Fund codes
Fund Ticker Share Class Fund Number CUSIP
JOPSX Institutional 46653M872
Fees and Expenses
Fund Ticker Share Class Net Expense Ratio* Gross Expense Ratio*
JOPSX Institutional 0.88% 1.93%

*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, 2024.

Fund ratings

Data as at 28 February 2023
Morningstar Rating Rank
  Rank Percentile Rating
Overall Morningstar Rating™     5-Star
1 year 1/744 1%
3 years 72/704 9% 5-Star
5 years 43/611 8% 5-Star

Administration

Investment Advisor JOHCM (USA) Inc.
Transfer Agent Northern Trust
Custodian Northern Trust

Investment Background

Data as at 28 February 2023

Strategy Highlights

As at 31 December 2022

In US dollar terms, equity markets rallied strongly in the first two months of the quarter before fading in December. However, the dollar fell significantly against most major currencies, meaning that equities were up much less in sterling and euro terms. US 10 year treasury yields ended the quarter roughly where they started it, around 3.8%, but there was a tremendous amount of volatility over the quarter, ranging from over 4.2% to nearly 3.4%, as uncertainty continued about the medium-term outlook for inflation and interest rates. Energy prices continued to retreat as hopes rose for a resolution in Ukraine, and the copper price rose on expectations that relaxation of zero-Covid rules in China would prompt an economic recovery.

The quarter saw significant outperformance by cyclical sectors (Industrials, Materials, Energy and Financials), while the virtual world winners of recent years (Technology, Media and Consumer Discretionary) resumed their underperformance after the brief summer rally. Regionally, Europe was particularly strong, helped by currency strength and a sector mix much less exposed to technology and related sectors than either the US or Emerging Markets. These trends helped the fund outperform, given our sectoral and regional positioning relative to the index. Notably, the three most significant contributors to our outperformance were stocks we didn’t own - Tesla, Amazon and Apple1. In terms of active contributors, it was pleasing to see the outperformers came from a wide range of sectors and geographies, testimony to our ‘forgotten middle’ thesis. We also note underperformance from Cameco, which is partly a reversal of the previous quarter’s outperformance.

The outlook for medium-term investment returns is significantly better than it was twelve months ago. We are clearly past the peak of rampant speculation and widespread complacency; markets are no longer extrapolating an unsustainable set of circumstances, growth rates or discount rates. TIPS yields are positive again, credit spreads have widened materially and equities have derated. Given the excesses built up over many years, we think it is likely to take more than twelve months to unwind them. Equity indices remain unusually concentrated and are still dominated by the winners of the last cycle. For example, the top 250 companies in the MSCI ACWI Index still have a combined weight above 60%. Meanwhile, we would not describe equity valuations, at an aggregate level, as particularly cheap. We may be approaching a ‘widely anticipated recession’, but someone needs to tell the sell-side analysts, because we haven’t seen many downgrades yet. We remain in a tightening cycle and, longer term, a more inflationary environment, meaning that cycles are likely to be shorter and volatility higher than in the 2010s. Equity investors need to remain vigilant about all three major risks: derating, downgrades, and refinancing. Our strategy for navigating this environment is unchanged – we will act with patience and discipline but take advantage of the opportunities which are created by volatility.

 

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

1. Listed names are non-benchmark stocks

Total Return (%)

Data as at February 28, 2023
  1 Month Total Return 3 Month Total Return YTD Total Return 1 Year Total Return Cumulative Since Inception
Institutional Shares Net -1.68 6.78 5.73 5.93 43.58
Benchmark -2.09 5.93 5.84 -3.14 41.43

Annualised Return (%)

Data as at December 31, 2022
  1 Year 2 Year 3 Year 4 Year 5 Year 10 Year Annualized Since Inception
Institutional Shares Net -0.59 0.71 3.15 6.72 3.69 5.01
Benchmark -14.45 -2.44 0.87 5.78 1.54 4.74

Monthly returns (%)

Data as at 28 February 2023
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
Fund 2016 -0.24 -3.28 -2.60 2.01 -4.13
Benchmark 2016 -0.29 -2.05 -1.99 3.42
Fund 2017 0.85 1.95 1.91 2.88 5.22 -0.99 2.18 1.26 1.32 0.71 -0.15 -0.18 18.17
Benchmark 2017 2.90 1.43 2.75 2.54 3.67 -0.18 2.88 -0.04 2.49 1.52 1.05 1.61 25.02
Fund 2018 1.56 -3.12 1.58 1.23 -1.02 -0.34 1.09 -0.66 1.23 -6.16 1.00 -3.88 -7.58
Benchmark 2018 5.02 -4.51 -1.80 2.28 -2.25 -1.22 2.46 -1.93 0.87 -7.96 -0.13 -4.85 -13.79
Fund 2019 5.08 2.00 1.63 2.83 -4.76 5.27 -2.07 -0.74 1.93 2.75 0.40 2.92 18.15
Benchmark 2019 6.57 2.55 0.63 2.81 -4.80 5.93 -1.27 -2.59 2.87 3.59 1.13 3.25 22.01
Fund 2020 -0.92 -6.55 -11.34 3.46 5.38 2.02 4.34 2.42 -2.90 -4.26 15.23 3.50 8.20
Benchmark 2020 -2.09 -9.04 -13.35 6.46 4.35 3.40 2.33 5.14 -2.60 -3.99 15.50 4.65 7.82
Fund 2021 -1.67 1.78 2.54 4.30 2.35 -1.98 -0.20 0.11 -5.77 2.16 -6.63 5.79 2.02
Benchmark 2021 -1.07 2.24 2.30 3.01 3.59 -1.44 0.75 1.76 -2.90 2.46 -4.65 5.12 11.26
Fund 2022 0.11 -0.83 -3.04 -1.97 2.22 -8.45 6.10 -5.49 -8.09 7.25 12.79 0.99 -0.59
Benchmark 2022 -4.83 -1.77 0.64 -6.47 0.75 -9.28 4.98 -4.75 -9.35 5.38 11.26 0.08 -14.45
Fund 2023 7.54 -1.68 5.73
Benchmark 2023 8.10 -2.09 5.84

Expense Ratio (%)

Data as at February 28, 2022
Share Class Gross Expense* Net Expense*
Institutional 1.93% 0.88%

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 EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada. Any Indicies mentioned are unmanaged statistical composites of stock market performance. Investing in an index is not possible.

 

*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, 2024.

Top 10 holdings and active weights

Data as at 28 February 2023
Top 10 holdings
CRH 4.36%
B&M European Value Retail 4.18%
Shellé 3.89%
Heineken 3.66%
Thales Group 3.65%
Sanofi 3.50%
Publicis Groupe 3.49%
Handelsbanken 3.28%
Compass Group 3.26%
Deutsche Bérse 3.23%
Top 10 active weights
B&M European Value Retail +4.18%
CRH +4.12%
Heineken +3.60%
Thales Group +3.55%
Publicis Groupe +3.37%
Handelsbanken +3.18%
Couche-Tard +3.09%
Continental +3.08%
Deutsche Börse +3.01%
Compass Group +2.99%

Regional / Country breakdown

Data as at 28 February 2023
Portfolio Benchmark Relative
Canada 6.04% 0% 6.04%
Finland 3.95% 1% 2.94%
France 16.18% 12.4% 3.77%
Germany 13.00% 8.48% 4.52%
Ireland 4.36% 0.75% 3.6%
Japan 11.82% 21.25% -9.42%
Netherlands 5.43% 4.44% 0.99%
Spain 3.41% 2.62% 0.79%
Sweden 5.08% 3.47% 1.61%
United Kingdom 17.04% 15.25% 1.78%
Cash 3.63% 0% 3.63%

Sector breakdown

Data as at 28 February 2023
Portfolio Benchmark Relative
Industrials 16.26% 15.40% 0.90%
Consumer Discretionary 15.59% 11.65% 3.90%
Energy 14.36% 4.82% 9.60%
Financials 13.15% 19.32% -6.10%
Consumer Staples 10.48% 10.09% 0.40%
Health Care 8.23% 12.77% -4.60%
Communication Services 7.22% 4.42% 2.80%
Materials 5.72% 7.71% -2.00%
Utilities 3.64% 3.31% 0.30%
Information Technology 1.65% 8.07% -6.40%
Real Estate 0.00% 2.39% -2.40%
Cash 3.63% 0.00% 3.63%

Market cap breakdown

Data as at 28 February 2023
Portfolio Benchmark Relative
<10BN 22.55% 10.57% 11.98%
>10BN 73.80% 89.43% -15.63%

Fund

As at noon Share class Currency CUSIP Number NAV Change Change % Previous
JOHCM International Select Fund 29/03/2023 Institutional USD 46653M849 21.29 0.19 0.90% 21.10
Investor USD 46653M823 21.34 0.19 0.90% 21.15
JOHCM Emerging Markets Opportunities Fund 29/03/2023 Advisor USD 46653M203 10.70 0.17 1.61% 10.53
Institutional USD 46653M104 10.73 0.17 1.61% 10.56
Investor USD 46653M302 10.69 0.16 1.52% 10.53
JOHCM Global Select Fund 29/03/2023 Advisor USD 46653M807 12.49 0.12 0.97% 12.37
Institutional USD 46653M708 12.53 0.12 0.97% 12.41
JOHCM Emerging Markets Small-Mid Cap Equity Fund 29/03/2023 Advisor USD 46653M500 11.57 0.11 0.96% 11.46
Institutional USD 46653M401 11.58 0.11 0.96% 11.47
JOHCM Global Income Builder Fund 29/03/2023 Advisor USD 46653M799 9.73 0.00 0.00% 9.73
Institutional USD 46653M815 9.73 0.00 0.00% 9.73
Investor USD 46653M781 9.73 0.00 0.00% 9.73
JOHCM International Opportunities Fund 29/03/2023 Institutional USD 46653M872 10.59 0.12 1.15% 10.47
JOHCM Credit Income Fund 29/03/2023 Institutional USD 46653M740 8.97 0.00 0.00% 8.97
Regnan Global Equity Impact Solutions 29/03/2023 Institutional USD 46653M716 7.26 0.06 0.83% 7.20
TSW Large Cap Value Fund 29/03/2023 Institutional USD 46653M641 12.44 0.11 0.89% 12.33
TSW High Yield Bond Fund 29/03/2023 Institutional USD 46653M658 8.67 0.03 0.35% 8.64

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 EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada. Any Indicies mentioned are unmanaged statistical composites of stock market performance. Investing in an index is not possible.

 

*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, 2024.

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