A dogged dedication to high quality companies has seen Independent Franchise Partners’ Global Franchise Fund take the Money Management/Lonsec Fund Manager of the Year Award in the Global Equities Broadcap category.
Adrian Stewart, head of distribution for Macquarie Professional Series (Australia’s gateway to the fund), said one of the beliefs underpinning Independent Franchise Partners’ investment strategy is that high quality companies are rare.
“They take quite a while to find a company because obviously high quality companies are very difficult to find and they’re rare, but when they do find them they invest with conviction and they will hold,” Stewart said.
He said Independent Franchise Partners rely on valuation not benchmarks, capping their stocks at 40 and holding just 30 stocks in their portfolio currently.
“They simply look for high quality companies at value and they don’t deviate from that, and that is how they’ve been able to generate performance for clients,” he said.
Lonsec said the fund’s focus on quality companies produced some growth characteristics throughout the cycle and allowed them to perform well in difficult conditions.
Staying true to their investment discipline, Independent Franchise Partners managed to protect their client’s assets from some recent turbulence while large amounts of capital were lost to other areas of the market, Damien Green, IFP’s head of Asia and Australia said.
Stewart said the fund’s focus on capital preservation ensured consistent performance through all market conditions.
“They’re just such a compelling manager in a market where global equities has proven to be a really difficult space for financial advisers to find,” he said.
Stewart said the benchmark hadn’t really delivered a return for the past decade, which made finding the right fund manager “absolutely critical”.
Lonsec also praised Independent Franchise Partner’s focus on valuation and not overpaying for cashflows.
Magellan Financial Group's Global Equity Fund also made the finals. Director Frank Casarotti said their fund’s sector-specific strategy combined macro observations with deep company analysis.
“What we’re trying to do is identify the sectors we think will have the tail wind in the world and then zero in on what we think are ultimately the highest quality companies operating in that sector,” he said.
Buying into multinationals with pre-existing sales in emerging markets, being underweight European financials and positioning for the US recovery were macro considerations that contributed to the fund’s performance in 2011, Casarotti said.
Grant Samuel’s Epoch Global Shareholder Yield Fund was chosen by Lonsec to complete the finalist trilogy.
Andrew McKinnon, chief executive for Grant Samuel said their focus on free cashflow and the ability of companies to use cashflow to pay relatively high dividends, buy back stock or reduce debt had given their clients some downside protection during volatile times.
McKinnon said many people were talking about being overweight equities, and in some cases cashflows had been negative, but Grant Samuel had seen positive cashflows for some time.
He said their New York based partners since 2007, Epic, had been integral to delivering the strategy.
“You get the people, process, and ultimately you get good performance,” he said.
