TM Redwheel Global Equity Income

TM Redwheel Global Equity Income fund will adopt a similar philosophy and investment process to that used very successfully by Nick and the team when they managed the BNY Mellon Global Income fund (previously the Newton Global Income fund). The fund will be broadly diversified across sectors but could be materially underweight or completely omit a number of sectors if they are deemed unattractive.

Previously called TM RWC Global Equity Income

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Our Opinion
Fund Managers
Key Facts
Fund Performance
Risk
Company Description
Talking Factsheet
Investment process
ESG

Our Opinion

While the fund itself may be new, the team – led by Nick Clay – is highly experienced, and the investment strategy is well-proven. It has a true contrarian nature backed up by a logical and disciplined philosophy. This leads to an attractively yielding income fund (every holding must yield at least 25% more than the broader market at the point of purchase) that also allows for capital return from a concentrated portfolio.

Fund Managers

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Fund Managers

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Nick joined Redwheel in November 2020 as Lead Portfolio Manager, bringing his team from Newton Investment Management, where he had managed the Global Income Equity strategy since 2012. With over 30 years of experience, Nick began his career as an Equity Analyst at Sun Alliance in 1991 and later managed UK equities at Morley Fund Management. He has also managed a variety of global multi-asset strategies at Newton. Nick holds a BA (Hons) in Economics and Philosophy from the University of Leeds and is an Associate Member of the UK Society of Investment Professionals.

Manager photo

Andrew MacKirdy joined Redwheel in November 2020, bringing his expertise from Newton Investment Management, where he managed the Global Equity Income strategy since 2018. With a career starting in 1995, Andrew has held portfolio manager roles across global, EAFE, emerging markets, and European equities at Baillie Gifford, Lansdowne Partners, and Franklin Templeton. He also managed global equities at Polar Capital before joining Newton. Andrew holds an MSc (Econ) in Accounting and Finance from LSE and a BAcc (Hons) in Accountancy from Dundee University.

Nick joined Redwheel in November 2020 as Lead Portfolio Manager, bringing his team from Newton Investment Management, where he had managed the Global Income Equity strategy since 2012. With over 30 years of experience, Nick began his career as an Equity Analyst at Sun Alliance in 1991 and later managed UK equities at Morley Fund Management. He has also managed a variety of global multi-asset strategies at Newton. Nick holds a BA (Hons) in Economics and Philosophy from the University of Leeds and is an Associate Member of the UK Society of Investment Professionals.

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Andrew MacKirdy joined Redwheel in November 2020, bringing his expertise from Newton Investment Management, where he managed the Global Equity Income strategy since 2018. With a career starting in 1995, Andrew has held portfolio manager roles across global, EAFE, emerging markets, and European equities at Baillie Gifford, Lansdowne Partners, and Franklin Templeton. He also managed global equities at Polar Capital before joining Newton. Andrew holds an MSc (Econ) in Accounting and Finance from LSE and a BAcc (Hons) in Accountancy from Dundee University.

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Key Facts

Asset type Equity

Annual Income (Historic) -

Sector Global Equity Income

Gearing-

Fund Size-

Fund Manager Start Date 24 November 2020

Ongoing Charges Figure (OCF) -

Payment Date(s) Jan, Jul

Annual Management Charge (AMC) -

Fund Performance

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Risk

TM Redwheel Global Equity Income fund has a genuinely contrarian approach, which means the portfolio will have a distinctly different look to many other global funds. At his previous house, Nick often found himself buying stocks his colleagues were selling and selling what they were buying. As such, the fund is unlikely to have most popular talked about names in the top ten and will have periods of time when it has large under or over weights to certain sectors. The strategy has historically outperformed in volatile markets and, on a relative basis, does best in falling markets due to the valuation discipline, while lagging a little in rising markets.

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Company Description

Redwheel is a specialist, independent investment organisation that is employee-owned. The business was established in 2000 and has offices in London, Miami and Singapore. There are more than 50 dedicated investment professionals working across seven independent investment teams. They specialise in providing developed and emerging market equities, convertible bonds and income solutions. Redwheel is a registered trademark of RWC Partners Limited.

Fund Performance

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Risk

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TM Redwheel Global Equity Income fund has a genuinely contrarian approach, which means the portfolio will have a distinctly different look to many other global funds. At his previous house, Nick often found himself buying stocks his colleagues were selling and selling what they were buying. As such, the fund is unlikely to have most popular talked about names in the top ten and will have periods of time when it has large under or over weights to certain sectors. The strategy has historically outperformed in volatile markets and, on a relative basis, does best in falling markets due to the valuation discipline, while lagging a little in rising markets.

Talking Factsheet

Talking Factsheet

TM Redwheel Global Equity Income

Nick Clay

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Quote from the Fund Manager

I don’t believe I am a stronger human being than anyone else, so rely upon disciplines to protect me against common human mistakes and to lean the stats in your favour.

Nick Clay

Lead Manager

Investment process

Nick and the team focus on three things when they consider adding a holding to the TM Redwheel Global Equity Income fund: finding sustainable business models, at good valuations, and trading them with a strong buy/sell discipline. Each of these approaches are common in isolation, but rarely are all three together.

In order to find these ideas, the managers have an overriding philosophy to “buy the controversy and sell the consensus”. This means the fund has a contrarian approach. To find these controversies, they look for multiple types of ideas. These are categorised as ‘troubled compounding machines’, where temporary problems for a business are being mistaken for permanent issues; ‘ex-growth cash generators’, where the market believes a business is broken but is able to create longevity of returns; ‘profitability transformation’, where there are fears over a company’s exposure to the economic cycle; ‘capital intensity’, where the market is bored of a stock or underestimates its compounding power; and special situations such as spin offs or hidden assets.

From here, the team will go through the financial statements of the most interesting companies to build a series of scenarios focusing on the downside potential and risk of a dividend cut from the stock, as well as an upside scenario.

The focus on the downside is intended to draw out the risks of what could go wrong with a stock and what impact this will have on the portfolio primarily – and how sustainable the dividend is. From here, the managers will conduct liquidity risk analysis, to see how long it will take to trade a stock, how much this would cost and the percentage of the stock that is freely floating. This will determine the position size with a compelling idea being weighted 3-5% and an attractive one at 1-3%.

The total portfolio will be just 40-60 stocks, each yielding 25% above the market at the point of purchase.

Risk

TM Redwheel Global Equity Income fund has a genuinely contrarian approach, which means the portfolio will have a distinctly different look to many other global funds. At his previous house, Nick often found himself buying stocks his colleagues were selling and selling what they were buying. As such, the fund is unlikely to have most popular talked about names in the top ten and will have periods of time when it has large under or over weights to certain sectors. The strategy has historically outperformed in volatile markets and, on a relative basis, does best in falling markets due to the valuation discipline, while lagging a little in rising markets.

ESG

ESG - Limited

The philosophy of ‘buy the controversy’ means that Nick will remain open-minded about industries and firms with ESG issues, and therefore won’t exclude them. That’s not to say these issues are ignored though. Nick does consider ESG in the process, and is conscious of the potential risk ESG entails, but this isn’t a sustainable fund in that sense.

For environmental and social issues, Nick will look to identify issues, as well as the cost of addressing them, and build it into his estimate of company cash-flows. If there is evidence a firm cannot overcome their issues, this is marked very negatively. Governance considerations have more of a weight in the process, including factors such as management incentives, accounting practices and conflicting ownership structures.

Nick will use his shareholding to push for change, often in unpopular areas. For example, he has voted against Shell and Total in the past because he felt their CO2 reduction plans weren’t good enough.

There are lots of firms considered laggards for ESG reasons, but rather than preclude them from investment, Nick will monitor those that are improving their profile and be open to admitting them into the portfolio

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