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Lazard US Equity Concentrated

Elite Rated by FundCalibre

This extremely concentrated US fund typically holds no more than 20 to 25 companies, ranging in size from the fairly small all the way through to the very large. It contains the best ideas from across Lazard’s US equity funds and has outperformed the US stock market over long time periods. Launched in 2003, the fund only became available to UK investors in 2016.

Company Description

Since 1848, Lazard has been a trusted advisor to governments, financial institutions, public and private pension schemes, financial advisors and individuals around the world. It has a global presence with 16 offices worldwide and a team of more than 230 investment professionals.

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Fund Manager

Christopher Blake and Martin Flood run this fund, along with various other US equity strategies. Lazard’s extensive US equity team provide a powerful analytical resource. Christopher and Martin each have more than 20 years of investment experience and have been at Lazard since the mid-1990s. Martin has an accounting degree from St John’s University, while Christopher studied finance at the University of Denver.

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Each stock offers something different so our only theme is that we don’t have a theme. We swing for base hits not home runs.

Christopher Blake - Fund Manager

The Investment Process

Stocks in the fund fall into one of three buckets: compounders, mispriced or tactical. Compounders make up the largest bucket and are businesses that don’t need a lot of capital to run and can keep re-investing their profits for ongoing growth. This means the fund typically avoids sectors such as telecommunications or utilities. Mispriced refers to stocks that are cheap, but where there may be potential for earnings to rise. Tactical purchases may be shorter term trades where the managers want exposure to a certain business or sector for a particular period. The fund’s investment style has been equally weighted between value and growth over time, with Christopher and Martin adjusting to capitalise on market conditions.

Risk

Because of the small number of companies in this fund, returns are very dependent on the managers getting their stock picks right. Christopher and Martin can avoid entire sectors, which means they will often perform very differently to the market. That said, they are careful to invest in many industries and to make sure their companies have diverse profit drivers. The core base of compounders has proved resilient in the past and the fund has been roughly as volatile as the US market over the past 13 years. The managers analyse stocks thinking what could go wrong as well as what could go right, which also helps them to prepare for and protect investors in market falls.

Our Opinion

Without a doubt, this is one of the more interesting funds in its sector. It is genuinely different to the market and has consistently beaten the S&P 500, outperforming in the majority of calendar years since its launch, which is no mean feat. The managers don’t rely on external broker research to analyse stocks and instead build all their own models, which makes their process quite unique. The well-resourced team spend a lot of time on-the-ground in America and know every company in the portfolio inside out. For those looking to access the US market via a truly active strategy, this fund ticks all the boxes.

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©2014 FundCalibre Limited. All Rights Reserved. The information, data, analyses, and opinions contained herein (1) include the proprietary information of FundCalibre, (2) may not be copied or redistributed without prior permission, (3) do not constitute investment advice offered by FundCalibre, (4) are provided solely for informational purposes and therefore are not an offer to buy or sell a fund, and (5) are not warranted to be correct, complete, or accurate. FundCalibre shall not be responsible for any trading decisions, damages, or other losses resulting from, or related to, this information, data, analyses, or opinions or their use. The Elite Fund rating is subjective in nature and reflects FundCalibre’s current expectations of future events/behaviour as they relate to a particular fund. Because such events/behaviour may turn out to be different than expected, FundCalibre does not ,guarantee that a fund will perform in line with its FundCalibre benchmark. Likewise, the Elite Fund rating should not be seen as any sort of guarantee or assessment of the creditworthiness of a fund or of its underlying securities and should not be used as the sole basis for making any investment decision. FundCalibre disclaims any responsibility for trading decisions, damages or other losses resulting from any use of the Elite Fund rating.