AMP Capital marks the three year anniversary of the Global Companies Strategy, its global equities strategy, with an absolute return over the first three years to 31 March 2020 of 54.0% net of fees1, compared to global equity market returns of 4.6% over the same period2. On an annualised basis the strategy has returned 15.5%3 per annum net of fees, versus the market returning 1.5%4.
The three-year track record is a key milestone for the strategy which is available in a UCITS version, Global Companies Fund, rated five stars by Morningstar. The fund has reached US$125m of assets under management, supported by a cornerstone investment from one of the UK’s largest wealth managers.
AMP Capital, a global investment manager with US$143 billion in assets under management5, established a London-headquartered global equity capability in June 2016 and launched the Global Companies Fund, its first global equities product, in March 2017.
The strategy aims to deliver a compound rate of return greater than 10% per annum, after fees and costs, over the long term, with a lower risk of capital loss relative to broader global equity markets.
Over the past three years, culminating in the Covid-19 events, the strategy has generated higher than market returns during the bull market whilst also protecting clients’ assets during the recent dramatic downturn consistent with the dual objectives of the strategy. Since inception the strategy has in total outperformed positive monthly market returns by 66% and negative monthly market returns by 24%6.
The strategy’s investment approach is long term, absolute risk (not benchmark) aware, concentrated, and offers investors full portfolio and process transparency. The long-only strategy is managed collaboratively by the team of four Citywire AAA-rated7 investment managers located in London, Sydney and Hong Kong, led by Simon Steele, AMP Capital’s London-based Head of Global Equities.
Simon Steele, Head of Global Equities at AMP Capital, commented, “When we developed this strategy, we wanted to challenge some of the ‘norms’ of equity investing, with a focus on client outcomes. Our mandate was to deliver a global equity product that focussed on delivering repeatable and highly attractive long-term risk-adjusted returns for our clients, and we only invest in companies that can demonstrably support that objective.
“We set ourselves a target to achieve annualised double-digit returns after fees through a full market cycle, a goal that has been realised as we mark the three-year anniversary of the strategy. Only companies that we expect to maintain exceptional profitability over the long term and generate stable but superior growth in cash flows, year in year out, have earned a place in our portfolio. Over the past three years we have dismissed around 200 high-quality companies that might otherwise be seen as attractive investment opportunities.
“Many teams talk about collaboration – for us it is a core belief as to how we deliver the best outcomes for our clients. We invest substantial effort to ensure ongoing close collaboration and no stock enters our portfolio without the explicit support of all four of our Investment Managers (Andy Gardner, David Naughtin, Neil Mitchell and myself).
“Notwithstanding the current crisis and its deeply painful near-term human and economic consequences, we remain clearly focused on our objective and continue to identify companies that we believe are exceptionally well placed to take meaningful economic share in the years ahead.”
The strategy invests in a portfolio of 25 to 35 companies, selected for their strong wealth creation credentials through a rigorous and collaborative absolute risk aware investment process. The team believes that superior long term-wealth creation (the ability to compound cashflows at an above average rate persistently) sits at the core of a successful equity investment.
According to Simon Steele, “Wealth creation is characterised by strong competitive advantage, disciplined capital allocation and long-term structural pathways to growth, and we demand that all three pillars of success are in place before committing client capital to a long-term investment.”
1Net returns are net of all fees and costs and reflect the reinvestment of dividends and other income. Source: AMP Capital
2MSCI World All Countries Index (USD). Source: Factset
3Net returns are net of all fees and costs and reflect the reinvestment of dividends and other income, as at 31 March 2020. Source: AMP Capital
4MSCI World All Countries Index (USD). Source: Factset
5AUM as at 31 December 2019. Source: AMP Capital
6Based on AMP Capital Global Companies Strategy Composite (Gross) USD and MSCI World All Countries Index (USD). Source: AMP Capital
7Source: Citywire, May 2020
While every care has been taken in the preparation of this article, AMP Capital Investors (UK) Limited, Registered Office at Companies House, 4th Floor Berkeley Square House, Berkeley Square, London W1J 6BX (no. 05524536) makes no representations or warranties as to the accuracy or completeness of any statement in it including, without limitation, any forecasts. Past performance is not a reliable indicator of future performance. This article has been prepared for the purpose of providing general information, without taking account of any particular investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the appropriateness of the information in this article, and seek professional advice, having regard to the investor’s objectives, financial situation and needs. This article is solely for the use of the party to whom it is provided.