Equities that thrive on global change
The newly launched Capital Group UK — New Perspective Fund is a UK domiciled fund, based on Capit...
Capital Group New Perspective
This is the flagship global equities strategy of Capital Group. It has a track record of 50 years, investing in some of the world’s largest multinational firms that are able to benefit from transformational changes in the global economy. The fund has a unique multiple manager structure, with each of the nine named managers running their ‘sleeve’ in their own way. Their best ideas are blended together for a diversified portfolio.
Our opinion
Capital Group New Perspective has a unique approach to active management. Having multiple managers, with a bench of analysts ready to step up, means that the fund avoids key person risk that is inherit within the space. As such, it gives the strategy longevity as demonstrated by the >45-year track record. For those looking for large cap global growth exposure with active management, but without having to worry about manager change or style drift over the medium or long-term, this is a compelling option.Company description
Capital Group has history dating back to 1931 and is one of the largest fund managers in the world, managing over $2.5 trillion across equity and debt funds. The firm is privately owned by its employees, with over 400 investment professionals across its equities and fixed income divisions. Capital Group has offices globally including its native United States, the UK, China and Japan. It uses a unique multiple portfolio manager structure, with investment professionals given capital to invest from very early on in their careers, leading to a strong corporate culture and long-standing employees. Despite its size, the company only runs c.40 strategies globally, allowing it to focus on delivering long-term returns for clients.
Fund manager
Capital Group New Perspective's managers will all help to run a sleeve of the portfolio. These sleeves will vary in size depending on their conviction and number of best ideas. The portfolio manager team consists of Barbara Burtin, Patrice Collette, Noriko Honda Chen, Brady L. Enright, Kohei Higashi, Joanna F. Jonsson, Jonathan Knowles, Robert W. Lovelace, Anne-Marie Peterson, Andraz Razen and Steven T. Watson.
Alongside them, around a fifth of the portfolio is run by a team of analysts who can contribute a few of their best ideas from their own specialist research sector. There is also a bench of undisclosed managers to step in if a named manager stands down and needs to be replaced. These managers contribute ideas into the portfolio too. This system removes concerns about any key person risk and keeps consistency and continuity for the strategy.
I like to describe New Perspective as a fund of global champions. Typically they have globally diversified customer bases, global supply chains, and they're robust enduring companies with the potential to offer resilience and growth.
Jody JonssonFund manager
Investment process
Capital Group New Perspective fund has a unique multiple manager approach, looking to capture the companies that are leading change in global trends. The team aims to identify companies in the early stages of their growth trajectory and will want to hold them as they become future winners. As such, the portfolio will consist of future and global champions, with the latter of these providing some defensiveness for the fund.
To build the portfolio, the fund has nine portfolio managers, each with their own sleeve, and then an tenth sleeve run by a team of research analysts. Each of these groups are given their own capital to invest their way. They all have slightly different approach, some preferring more concentrated portfolios whilst others take a more diversified approach.
The work on the stock universe is supported by the vast analyst resource at Capital Group that will analyse a stock’s financial statements in detail. Company meetings are an essential part of the analysis, with the managers meeting the corporate team of the companies they look to invest into and challenge them on their approach and outlook, as well as discuss any issues the financial analysis may have uncovered.
The highest conviction ideas are put together to make the final portfolio. Each manager will have an allocation, with around 20% of the total fund assets given to the c.80 strong research team. Here, each analyst, often sector or subsector specialists, can invest a small amount of the fund into their highest conviction ideas if they see value in it. Each will put forward around four stocks and will try and balance them between cyclical and defensive ideas to ensure the portfolio doesn’t drift too far to one investment style. This creates around 180-190 small positions in this sleeve of the portfolio and this ‘tail’ has added around a quarter of the fund’s outperformance historically.
At an individual level, the managers can have more conviction, but this is balanced in the final portfolio to ensure single stock risk doesn’t dominate the portfolio.
ESG
ESG - Integrated
Capital Group is committing significant resources to supporting the integration of ESG factors into its investment decisions. The analyst teams will incorporate ESG factors into their in-depth analysis of a stock. They have investment frameworks which they use, populating data fields from their analysis of the company, including the financial statement and wider data sources. They will also use some external data to help identify issues they may have missed. The depth of the analyst resource allows them to focus on the most pressing issues for each company, rather than take a blanket approach. Any serious issues identified can then be analysed in greater depth, as well as providing the basis for ongoing monitoring, to ensure the problems are not getting worse. The firm will also engage and vote at AGMs. There is a dedicated team for governance and proxy issues, as well as a specialist team for ESG research, which will also conduct engagement with companies.
Risk
Investment officers monitor risk throughout the process to ensure the final portfolio remains balanced and considerate of all risks. One of these includes sell discipline, ensuring managers and analysts review their stocks on a regular basis especially after stock news. Managers and analysts are each renumerated on the relative performance of their stock selections, rather than the impact they have on the overall fund, meaning the portfolio becomes the highest conviction ideas of the investment professionals rather than a fight for capital.
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