FTF Martin Currie US Unconstrained

FTF Martin Currie US Unconstrained fund was taken over by Robbie McNab and Zehrid Osmani in 2019 and its investment approach was radically altered. It is a very high-conviction, concentrated portfolio of just 20 to 25 holdings and has a long-term (5-10 year) investment time horizon. The managers invest in large and medium-sized, high-quality growth companies, typically benefiting from long-term secular themes such as cloud computing.

Previously Legg Mason IF Martin Currie US Unconstrained fund

Our opinion

The US is a notoriously difficult market to beat for active investors, but FTF Martin Currie US Unconstrained’s approach sets it apart and gives it a real chance of consistently achieving outperformance. Zehrid is a very impressive manager and has built a process at Martin Currie that can give investors confidence that no stone has been left unturned in the goal of identifying risks and opportunities in the market.

Fund manager

Lead manager, and head of strategy, Zehrid Osmani joined Martin Currie in 2018 from BlackRock, where he spent 10 years as head of European equities research. At BlackRock, Zehrid ran several pan-European equity funds with a focus on unconstrained, high-conviction, long-term portfolios. Zehrid has over 20 years of investment experience, a BA in economics and finance from the Sorbonne, and a masters in international finance from Glasgow University.

Robbie McNab joined Martin Currie in 2007 as a trainee, researching consumer and industrial companies. During his time at the firm, he has also worked as a resources specialist on the Global Resources strategy and a global investment analyst, focusing on consumer companies. Before joining, Robbie was a business consultant at Zurich Financial Services. Robbie holds an MA in Economics from the University of Glasgow and is a CFA® Charterholder.

When looking at investment opportunities throughout the world, we aim to always keep that same spark of excitement in the eye as children have when in a toy shop. That sparkle in the eye is something that shows our energy and passion to relentlessly find exciting investment opportunities.

Zehrid OsmaniFund manager

Investment process

Central to FTF Martin Currie US Unconstrained’s strategy is taking a long-term approach (5-10 years) to allow quality growth firms to compound their returns. The managers believe the market is too short-term in its estimation of quality and look to exploit this.

The universe initially starts with c650 stocks. These are primarily large and medium-sized companies. There is some screening at this point to filter out the types of company the managers won’t want and focus only on the characteristics they like. This will include screening for factors such as low gearing and sensible capital allocations. This takes the universe to around 150 stocks.

This is then looked at from a reasonably high level by a member of the team who will prioritise around 50 stocks for further research, where they will perform in-depth fundamental analysis. Here, the managers will look at multiple factors that go into assessing a business.

On an operational level, this work will attempt to establish the quality and sustainability of the firm’s business model. On the financial side, they will look at the company’s returns, including its financial strength and verify the accounting policies. On a wider level, they will look for the growth drivers of a company, and the dynamics of the industry, to understand where the business sits within its own environment. On a more specific basis, they will look at the company’s ESG approach and its corporate ethos. At the centre of all these considerations will be valuation and how each factor affects it. The managers will then assess the valuation of a company.

The fund also looks to tap into certain secular themes. This includes the shift to electric vehicles, where the whole supply chain (from smart grid, to batteries, to data analytics) is considered, as well as the mobile ecosystem, including semiconductors, payment services and games publishers.

Due to the very intensive process, the fund will be concentrated at just 20-40 names. This ensures only the highest-conviction ideas make it into the portfolio. The quality growth approach will lead to natural tilts towards certain types of companies such as those in the tech, healthcare, and consumer discretionary sectors.

ESG

ESG - Integrated  

Rob and Zehrid include ESG integration as part of their comprehensive proprietary scoring system. This scorecard allows them to identify and quantify ESG risks associated with a stock just as they would for other fundamental inputs. This will include scoring the company on a huge number of inputs such as supply-chain issues, pollution risks, lobbying efforts, labour unionisation, cyber security, and ownership structures.

The templates are incredibly detailed and granular and allow analysts to score each input for each company on a 1-5 basis. All of these are then averaged to give an overall ESG score for the stock, which feeds into the process. However, whilst detailed, it doesn’t determine any investment restrictions. Low scoring companies can be invested in if the managers believe the risks are factored into the share price, and the return opportunities outweigh these risks. Those with the lowest ESG scores, and therefore exhibiting the highest risks, are those most in focus for engagement.

Risk

The fund will invest in large and medium-sized firms, which means that, relative to the benchmark, it will have a smaller average company size. This may lead to periods of relative underperformance if the market is being driven by straightforward momentum, though this is only expected to occur in short-term periods.

Rob and Zehrid have a sophisticated risk analytics tool which displays the risks they have taken in multiple different ways, allowing them to monitor in real time what risks they are taking and where they are coming from.

See more

Read more about this fund

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 nor 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. All performance data, as well as fund size, OCF, AMC, annual income (historic), share price discount or premium, is sourced directly from FE Analytics, and will change periodically.