JOHCM Global Opportunities

Ben and Robert take a disciplined, long-term approach to investing in a concentrated portfolio of high-quality companies. They look for businesses with durable competitive advantages, strong cash generation and healthy balance sheets that can both reward shareholders and reinvest for future growth. However, quality alone is not enough, they will only invest when a company's shares trade below what they believe is its true value. This makes the fund a blend of both quality and value investing.

The process begins with a quantitative screen that looks for companies with high returns on capital, reliable cash generation and low levels of debt. This removes most of the global stock market, leaving a shortlist of companies that meet the team's quality criteria. From there, the managers carry out detailed, in-house research to understand each company's business model, competitive position and long-term prospects.

A key part of the process is estimating a company's intrinsic value using cash flow analysis. Rather than relying on market sentiment or short-term earnings forecasts, the managers assess the cash a business can generate over time and compare this with its current share price. They also consider a range of possible outcomes to test their assumptions.

The fund will only invest when the potential reward significantly outweighs the potential downside. If suitable opportunities are scarce, the managers are willing to hold cash rather than compromise their investment standards. This patient and valuation-driven approach aims to build a portfolio of businesses capable of delivering attractive long-term returns.

The fund typically invests in 30 to 40 companies, providing diversification across different countries and sectors while maintaining a focused portfolio. The managers place a strong emphasis on protecting investors' capital by investing in high-quality businesses and avoiding companies they believe carry unnecessary risks. The fund's focus on quality has helped it hold up relatively well during periods of market weakness since launch.

The managers are also prepared to hold higher levels of cash (up to 20% of the portfolio ) when they believe attractive investment opportunities are limited. While holding cash can reduce the fund's participation in rising markets, it may help limit volatility during more difficult market conditions and provides flexibility to invest when valuations become more attractive.

JO Hambro uses a range of sources to help its fund managers make informed judgements when it comes to their investment decisions. For ESG analysis this includes multiple different external inputs. The managers have access to this ESG analysis and can incorporate it into his stock selection and portfolio construction process. The governance factor is often the most in focus, as it has the greatest alignment with the quality characteristics Ben and Robert are looking for. The managers can use the analysis to decide whether they think the ESG risks are material to the firm. This judgement of materiality, and the focus on valuation, does not rule out any industry, meaning that all options can be invested in so long as they meet the valuation and quality metrics. The overall portfolio is likely to have above average ESG scores but may contain names some sustainably-focused investors may deem unpalatable.