Guinness Global Innovators
As the name suggests this fund is all about finding, and investing in, innovative and disruptive businesses which are changing the world in which we live. The team creates its investment universe by identifying nine innovation themes. The managers then pick the highest quality, fastest growing and best value stocks from within these themes.
Our Opinion
Fund Managers
Fund Managers
Matthew is the portfolio manager for both the Guinness Global Equity Income strategy and the Guinness Global Innovators strategy. He joined Guinness in 2005, having previously worked at Goldman Sachs in Foreign Exchange and Fixed Income after joining their graduate scheme in 2004. Matthew graduated from New College, University of Oxford, with a Master’s degree in Physics and is a CFA Charterholder.
Ian is the portfolio manager for the Guinness Global Equity Income strategy and the Guinness Global Innovators strategy. He joined Guinness in 2006 after completing a D.Phil. in experimental physics at Christ Church, University of Oxford. Ian holds a First Class Honours Master’s degree in Physics from University College London, earned in 2003, and is a CFA Charterholder.
Fund Performance
Risk
Quote from the Fund Manager
We both studied physics at Oxford, so we have a natural preference for good metrics rather than good stories. We try to find the clear signals among the noise of the market.
Matthew Page
Co-Manager
Investment process
The managers have identified nine core innovation themes through reading and research. These themes are: advanced healthcare; artificial intelligence and big data; clean energy and sustainability; cloud computing; internet, media and entertainment; mobile technology and the internet of things; next generation consumer; payments and FinTech; robotics and automation.
Companies with a market capitalisation of over $1billion and with exposure to these themes are included in the managers’ universe. The universe is then screened for quality: return on capital should be more than the cost of capital last year, debt to equity should be less than 150% and positive earnings growth should be expected in the coming year.
From here, stocks are assessed on four different metrics: quality (looking at the initial screen in more detail in terms of margins, returns on capital and balance sheet strengths), growth (historic sales and profits and forecast growth for the future), valuation (relative to history, the industry and the market) and momentum (one, three and six month price and earnings).
Companies which look interesting on these metrics will be researched in much more detail. The managers will seek to understand the company’s business model and potential risks faced. Only the best companies will make it into the final concentrated portfolio. Guinness Global Innovators fund is generally long term, with a low turnover and an average holding period of three to five years.
Like all Guinness funds, the portfolio is made up of 30 equally-weighted stocks. The managers trim winners and top up underperformers. There is a strict one in one out policy.
Risk
The fund is genuinely index agnostic although the portfolio is regularly monitored for concentration risk.
As is to be expected, the fund has generally had a high weighting in technology companies (historically 40% to 50% of the portfolio), while financials, utilities, materials, energy, real estate and consumer staples are generally avoided. This can make performance quite lumpy and the fund more volatile than its peers.
ESG
ESG - Limited
Guinness’ approach is to focus on quality companies and invest with a valuation discipline. The managers believe this approach gives them an implicit bias towards better ESG characteristics. These quality characteristics are both financial and non-financial and will determine whether a firm can create value throughout a business cycle. ESG factors are considered part of this, especially those that carry a material risk to the future returns of the business. This means that in practice, many firms with negative ESG profiles, such as oil & gas and mining companies, do not pass the process and are therefore not included in the portfolio, but there are no specific ESG restrictions on their inclusion.