Making the sense of the rotation from growth to value
The intense style rotation from ‘Growth’ to ‘Value’ that we witnessed in January 2022 was ferocious,...
AXA Framlington American Growth
Innovation, unique brands and intellectual property are the sort of features that can give companies a competitive advantage, helping them grow into market leaders. These kinds of stories are what manager Steve Kelly and his team hope to uncover for this fund in their quest for growth stocks in the US market.
Our opinion
Steve is an extremely experienced manager, backed up by a well-resourced team. The focus on strong growth allows the AXA Framlington American Growth fund to be able to benefit from exciting, less researched companies in the US market. The growth bias naturally leans towards this fund performing better when these stocks are in favour.
Company description
AXA Investment Managers (AXA IM) is the asset management arm of the eponymous French insurance giant. It’s equity franchises are split into two brands: Framlington Equities and Rosenberg Equities. The latter focuses on systemic investment (using quant-based modelling), while the former is run by active fund managers. AXA Framlington Equities was awarded the Elite Provider for Equities rating in 2015, 2016, 2018 and 2021.
Fund manager
Steve Kelly's experience in US equity markets spans more than 25 years and he has run this fund since he joined AXA in 1997. Steve started his career at Olliff & Partners as a trainee in the equity research department, before joining the US desk at Capel Cure Myers as an assistant fund manager, where he was later promoted to fund manager. He graduated from the University of Exeter with an honours degree in Economics.
You need to be able to innovate and change behaviour as a result of innovation, and that leads to certain sector biases that emerge. It’s no good innovating in the consumer staples sector; nobody’s ever going to change the way people wash their hair.
Steve KellyFund manager
Investment process
As the name suggests, AXA Framlington American Growth has a strong growth bias and Steve aims to invest in companies exhibiting genuine organic growth. Finding the stories that fit his stock-picking framework is what Steve believes will provide investors with superior returns over the long term. Meetings with management are central to the research process; the team collectively conduct more than 200 company meetings per year. Steve benefits from the cross-fertilisation of investment ideas provided by Framlington managers, notably in technology, healthcare and biotechnology. Around a third of the portfolio is typically invested in tech stocks. The fund tends to have a considerable weighting in mid-cap stocks. The US equity team support a collaborative environment whereby stock ideas are openly shared between the fund managers.
ESG
ESG - Limited
As a firm, AXA has company-wide investment restrictions based on specific ESG risks – an approach that has been very forward thinking. It monitors and excludes multiple industries for all assets under management (e.g: controversial weapons, palm oil and soft commodities). It has also recently enforced and strengthened its stance on coal-based power production with limits and exclusions on revenue, power generation, expansion and mining development. Beyond this, the fund has no further restrictions. Governance is, however, an important consideration, and Steve always engages with management teams of his portfolio holdings.
Risk
The nature of growth companies, which tend to be cyclical, means the fund will be more volatile than the typical large-cap focused US fund. Investors should be aware of the fund’s heavy style bias and the fund may struggle during periods when the value style of investing is in favour.
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