IFSL Evenlode Income
IFSL Evenlode Income is a highly concentrated portfolio of quality UK companies. Managers Hugh Yarrow and Ben Peters believe the market fundamentally underestimates the value of high-quality businesses because of its obsession with short-term factors. As a result, they aim to take a much longer investment view in IFSL Evenlode Income than is typical of most funds today.
Previously WS Evenlode Income
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Hugh Yarrow, Lead Manager Hugh Yarrow is a co-founder of Evenlode and serves as the lead portfolio manager for the Evenlode Income fund, which he launched in October 2009. Before founding Evenlode, he managed several equity income funds at Rathbone Unit Trust Management. Hugh graduated with a first-class degree in Philosophy and Mathematics from Edinburgh University and is a Fellow of the Chartered Institute for Securities & Investment.
Ben Peters, Co-Manager Ben is the co-founder of Evenlode and manages the Evenlode Global Income Fund, which launched in 2017. He has been involved with the Evenlode Income fund since its launch in 2009. Before starting Evenlode, Ben was a physicist, earning a doctorate from the University of Oxford and a first-class degree from University College London. He also holds the Investment Management Certificate and has completed Level 1 of the Chartered Financial Analyst qualification.
Hugh Yarrow, Lead Manager Hugh Yarrow is a co-founder of Evenlode and serves as the lead portfolio manager for the Evenlode Income fund, which he launched in October 2009. Before founding Evenlode, he managed several equity income funds at Rathbone Unit Trust Management. Hugh graduated with a first-class degree in Philosophy and Mathematics from Edinburgh University and is a Fellow of the Chartered Institute for Securities & Investment.
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Quote from the Fund Manager
Evenlode is named after the local Oxfordshire river. As the name suggests, we like all the holdings in the portfolio to contribute to a healthy, growing, free cash flow stream over time.
Hugh Yarrow
Lead Manager
Investment process
Evenlode Income is highly concentrated, with between 30-50 stocks, and with its top ten holdings making up around 55% of the portfolio.
Hugh and Ben invest only in high quality, cash-generative businesses. They avoid those with high capital expenditure, such as miners or oil and gas producers.
Their proprietary research and portfolio management software system, “Eddie”, helps the team identify compelling valuation opportunities, which the managers will discuss in their weekly investment team meetings. Eddie is also used as part of the ongoing, daily portfolio management and research process.
The managers then look in more detail at companies to identify if they have hard to replicate business models, intangible assets, and high barriers to entry, in sectors where they consider the likelihood of substitution risk and disruptive technology to be low, and in which customers buy the product based on its perceived value to them, rather than on the production cost.
Once a suitable stock has been identified, detailed research and analysis of the business will take place, including looking at strategy and earnings reports, buyer/supplier analysis and even speaking to ex-employees to get an all-round view of the company. The fund managers will meet company management to understand their long-term strategy and their approach to risk management.
Each holding should also have an attractive, well covered dividend yield in order for the fund to fulfil its income mandate.
Risk
The managers reduce volatility by investing in high quality, defensive businesses. These businesses’ revenue streams are extremely well diversified, helping to reduce any stock-specific risk. Regular risk management meetings are held to ensure all key risk factors are considered. We expect IFSL Evenlode Income to outperform in down markets and underperform in a strongly rising market.
ESG
ESG - Integrated
Evenlode regards environmental, social and governance considerations as an integral part of the investment philosophy, and the investment team engages actively with the companies in which the fund is invested. The team believes that the consideration of ESG factors in the investment process can help to sustain and improve returns, whilst also having the potential to create a positive impact in the economy and society.
Evenlode considers integrating ESG factors into the mainstream analysis as a means to create a more robust risk management framework, allowing managers to consider all the risks a company faces - financial and non-financial. This gives them a more holistic view of the business, and they can manage risk accordingly. Evenlode believes that the more risks identified and managed, the higher the chance there is of making a positive impact on investment returns. When conducting the initial analysis of a stock, before it is added to the investable universe, considerations such as the long-term industry outlook, management quality, company culture and the company’s social impact (negative or positive) are all taken into consideration.
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