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Guinness Global Equity Income
Guinness Global Equity Income fund aims to provide investors with both income and capital growth. The portfolio typically consists of around 35 equal-weighted stocks, which the managers aim to hold for three to five years. They focus on how well, and how consistently, a company can use money to generate returns. They also have substantial freedom to entirely avoid countries and sectors they don't like.
Our opinion
The Guinness Global Equity Income fund is very concentrated, holding high quality stocks, which have consistently outperformed in their sector. We believe the managers' focus on first choosing the right companies - rather than filtering by dividend yield - gives them a greater chance of finding hidden gems in the market. They look for growing, rather than high, income and the equally-weighted portfolio also sets the fund apart from many of its peers. The one-in, one-out philosophy means the fund stays up to date with the managers' best ideas, because they have to consider the worst of their investments, rather than simply adding a position. We think this is a core global income holding.
Company description
Guinness Global Investors was established in 2003 by Founder and Chairman Tim Guinness. It is an independent active fund manager specialising in long-only equity funds and private equity investments. At heart, it is a value (or growth at reasonable value) investor. Managers combine strategic sector selection with a fundamental screening process to identify stock opportunities and result is a suite of high conviction, equally weighted portfolios. The company has a collegiate culture, with teams across the business benefiting from each other’s expertise in achieving positive outcomes for investors.
Fund manager
Guinness Global Equity Income has been co-managed since its launch in 2010 by Matthew Page and Dr. Ian Mortimer. Both studied at Oxford University, Matthew gaining a Master in Physics and Ian achieving a PhD. They joined Guinness Asset Management in 2005 and 2006 respectively. Matthew previously worked as an analyst for Goldman Sachs, whereas Ian began his investment career with Guinness.
We both studied physics at Oxford, so we have a natural preference for good metrics rather than good stories. We try to find the clear signals among the noise of the market.
Matthew PageFund manager
Investment process
Matthew and Ian target those companies that consistently create value for shareholders through an entire business cycle They use a screening process based on ten consecutive years of high returns on capital invested. This creates an investable universe of around 600 stocks, from 16,000 global names. Those with a market value below US$1 billion and with high debts are further filtered out, leaving the managers with around 500 stocks to analyse. They use an in-house model that identifies stocks trading at a discount relative to the market, their peers and their own historical price, with a focus on returns the company has control over. An exploration of company financials then brings them down to the 35 holdings for the portfolio on a one-in, one-out basis.
ESG
ESG - Limited
Guinness’ approach is to focus on quality companies and invest with a valuation discipline. The managers believe this approach gives them an implicit bias towards better ESG characteristics. These quality characteristics are both financial and non-financial and will determine whether a firm can create value throughout a business cycle. ESG factors are considered part of this, especially those that carry a material risk to the future returns of the business. This means that in practice, many firms with negative ESG profiles, such as oil & gas and mining companies, do not pass the process and are therefore not included in the portfolio, but there are no specific ESG restrictions on their inclusion.
Risk
The fund's volatility has been about average relative to its peers. There is no bias towards any particular investment style, which means the portfolio will be less affected by which style is currently in favour, dampening volatility. The managers avoid companies that are highly cyclical or highly leveraged. However, it is important to note that the risk of a single stock adversely impacting the portfolio is higher due to the low number of holdings within Guinness Global Equity Income 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.