Managed since December 2014 by the same manager and with the MSCI North America Index as a benchmark, the fund invests in attractive US companies with sustainable dividend yields.
Is managed by a highly experienced and top performing value manager
Adopts a disciplined value style with a distinctive quality overlay
Offers lower risk than the broad market with low correlations to other US funds
November 2019 - Latest commentary
US markets had another strong month in November 2019, advancing a little less than 4%. This has been an extraordinary year for the US markets, with nine months out of eleven year-to-date witnessing strong advances. This has put the year-to-date advance at a stellar 27%.
The low treasury yields continued to dictate the equity markets, following their brutal fall over the year. The ten-year ended the month around 1.78%, up from up from 1.70% at the end of the previous month. Year-to-date yields are down by more than 130bps.
Value, which remains very cheap, advanced by more than 3%, yet still trailed the growth style’s advance of 4.5%. The year-to-date differential widened again to as much as 9%. Over a three- and five-year cycle, value is trailing growth by 40% and 44% respectively, while over ten years the differential is at more than 110%, making this a once in a multi-decade opportunity, last witnessed 30 years ago.
Commodities continued their decline in November, losing another 1% for a year-to-date performance of negative 9%, despite the advancing markets. Oil was flat and gold fell back, losing some 3%.
Health care, technology and financials acted as the best sectors of the month. Utilities, real estate and materials bucked the trend on the worst sectors. In corporate news LVMH offered to acquire New York’s Tiffany Corp at a premium.
The fund advanced by almost 6% in the month of November, strongly outperforming both the market and its style indices. Stock selection acted for all of the outperformance, while sector allocation was a large drag once again as the style acted as a strong headwind. Currency was neutral.
Following the decade long underperformance of style, the fund offers a multi-decade opportunity to US investors. Despite the outperformance, the valuation discount remains at record unseen levels, providing an entry into the US market at a 49% discount on a price-to-earnings metric. The other value metrics showed even larger discounts, as value remained on sale. On a price-sales basis the discount was at 70%, having narrowed from the record 75% of the previous month. All this coupled with leverage that was significantly lower. The dividend yield was at 3,1%. Active share remained around 97%.
Previous months’ commentaries are contained within the fund factsheets.