product launch | domiciled in dublin, GAM star uk dynamic will invest in all-share universe
GAM has launched a new actively managed fund that invests solely in UK companies.
The Dublin-domiciled GAM Star UK Dynamic has a diversified portfolio of between 50 and 100 stocks. Ross Hollyman manages the portfolio by using a bottom up stock picking strategy based on comprehensive quantitative analysis.
Hollyman said: "The main drivers for stock selection are based on momentum, value and earnings quality. Stocks in the fund are likely to be attractive on more than one of these attributes and will actively balance and blend all three, aiming to achieve reduced volatility."
According to Hollyman, in looking for positive momentum he seeks companies where consensus earnings forecasts are generally being revised upwards. Frequently these are companies where investors have not reacted sufficiently to the positive news flow and it is not completely reflected in the stock price.
Stocks that have low valuations tend to outperform stocks where expectations are high. This is usually because stocks where expectations are lower may often have a better chance of achieving or even exceeding their objectives, whereas glamour stocks tend to be sold down sharply when their earnings disappoint.
In regard to earnings, quality companies that are conservative in their use of capital are preferred to those with a history of significant fund raising and frequent acquisitions. Cash flow is normally a more reliable measure of corporate performance, as it is a more persistent measurement of profitability than accounting earnings.
An investment universe of around 1,000 UK stocks are screened daily to identify companies that are attractive in terms of the three characteristics. Hollyman thinks many of the best stock ideas are likely to be small and mid-cap companies and the portfolio will be constructed with little regard to the benchmark index stocks or sector weightings.
Candidate stocks are then subject to an in-depth review. The fundamental strengths of each investment are measured by profitability, efficiency and liquidity. Hollyman also seeks corroborating evidence of trends from other sources such as customers and competitors. Assets are allocated across sectors and the capitalisation spectrum to achieve a diversified portfolio.
He avoids making investment decisions based on long-term revenue or profit forecasts, or speculating on the course of macroeconomic events.
The overall volatility of the fund is similar to the benchmark index, the FTSE All-Share. Risk control is achieved by carefully monitoring positions in individual securities and by investing across a broad spread of sectors and industries. Individual stock positions are trimmed if their prices rise to the extent that they no longer look particularly attractive in terms of valuation. Stocks that are trading on above-median valuations will usually be liquidated entirely if their earnings disappoint.
The fund is aimed at intermediaries, fund of funds providers and GAM"s Managed Portfolio clients. Minimum investment is £3,000. Purchase fee is up to 5%. Annual management fee is 1.5%.
'Exact timescale' of complaints not yet provided
1,400 reviews of adviser technology
To engage next generation
Now accessible to all
Some scheme’s ‘fib’