CT Global Focus

CT Global Focus is a concentrated, high conviction portfolio of best ideas. It invests in high quality, high return on capital businesses which can compound over the long term. This is a genuine global fund which will venture into emerging markets but only when it can find businesses which meet its strict quality criteria.

Our opinion

David Dudding has always had a very clear philosophy and process which he has executed very successfully throughout his career. Since taking on this fund in 2018, David has continued in this success, delivering excellent performance. The fund does have a clear quality growth bias and is likely to struggle when its style is out of favour, but this is a manager and fund we hold in very high regard.

Fund manager

David Dudding joined the company in 1999 as an equity research analyst. He managed the European Smaller Companies fund very successfully for over 10 years until December 2012. He was also lead manager for over 12 years on the popular European Select fund. In recent years, David has focused more on global equities, and he became the lead manager of this fund in April 2018. He has, however, been working on global strategies from as early as 2013. David previously worked for John Swire and Sons in Hong Kong and for Investors Chronicle as a financial journalist. He holds a degree in modern history.

David DuddingFund manager

Investment process

The fund’s philosophy is to invest in high quality, high return on capital businesses with a sustainable or improving competitive advantage. Stocks are selected based on fundamental research. Macro-economic factors are considered but they are a secondary consideration.

The team targets businesses with a strong market position, good long term growth prospects and high sustainable or growing returns on capital. It begins by looking at developed and emerging market companies with high or improving returns. The team then typically filters out a lot of companies by only focusing on those exhibiting a high return on invested capital over the past 5 years.

Ideas come from industry conferences, regional portfolio managers or from within the global equities team. Detailed analysis is carried out to determine whether the firm meets the team’s strict quality criteria. Companies should have one or more competitive advantage supporting above average returns.

Research also includes a Porters Five Forces industry analysis. Meeting companies is a key part of the research process, not just for potential investments but also to understand the competitors, suppliers, and different industry dynamics. The team historically conducts about 3,000 company meetings per year. The Porters Five Forces allows them to understand an industry’s structure and analysis includes the threat of new entrants; the threat of substitutes; industry rivalry; power of suppliers and power of customers. The preference is for consolidated or consolidating industries.

Stock ideas are presented at one of two weekly meetings and each idea will have a sponsor from the team with a price target. Unlike some global funds, this fund will venture into emerging markets. For example, the fund has historically owned stocks in India and Taiwan. However, by far the bulk of the portfolio remains in developed markets and in particular the US. It also has a heavy stylistic tilt towards quality growth. It will typically outperform in a falling market but underperform a ‘dash for trash’ rally.

ESG

ESG - Limited
ESG factors are an important part of stock research and debate. The fund does not screen out stocks based on ESG scores. However, if a stock scores poorly on either the internal ratings or MSCI’s measure, the manager must document that all the risks have been fully considered. The wider company has excluded controversial weapons from all portfolios since 2011. The team also avoids investments in companies which breach the UN Global Compact.

Risk

Risk is not managed to any benchmark. David believes risk is best managed by investing in quality companies and understanding how individual stock specific risks can impact the portfolio. A risk team provides the manager with a risk analysis quantifying and identifying unintended risk.

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