‘We like Amazon as it’s hard to replicate’
Global funds have the advantage of being able to jump between different companies, investing in those where they think the greatest growth will be. At a time of geopolitical uncertainty, amid a new American President, fears of emerging market growth, Britain’s Brexit negotiations and looming elections across Europe, this could be an advantage.
However, Louise Keeling, manager of the RWC Global Horizons fund, said she is not concerned where a company is based but only with how the stock will perform over the long term. Her fund launched just over three years ago and has £110m in assets, making it smaller than many rivals.
Ms Keeling talks about getting a “Trump bump”, why Amazon’s business is near impossible to replicate – and why you should buy Lloyds now.
How do you invest?
We are super long term. A lot of fund managers invest based on one-year performance, because that ties in with their personal compensation. But we want to invest in businesses that exhibit long-term characteristics for growth – we are owners rather than renters of companies.
We are compensated on a rolling five-year basis, so that means we can benefit from the short-term nature of other investors.
We are looking for companies trading at a fraction of their intrinsic value. I don’t want to overpay for a car, a house or an investment in a business.
Amazon is your largest holding. Why?
We have held Amazon since the fund’s inception over three years ago.
Amazon has succeeded in part because it shares its economies of scale and better purchasing power with its customers.
This now means it’s very difficult, and would be irrational, for someone else to come in and recreate what Amazon has got, as they can’t procure at the prices that Amazon sells at.
In the first year of us holding it Amazon was our worst-performing stock but we felt that the investment case was intact, so we added to it at below $300 a share and it became our top performer.
You also have Lloyds in the portfolio. Why do you think its shares will rise?
Lloyds is a good example of what we favour in financials, which is large single banks. Since the global financial crisis there has been a penalty for complexity.
Because Lloyds is so large in the mortgage sector, it has economies of scale in that business, so it should be in a very strong position to continue to lead that market.
At the moment you are paying about the value of the company’s assets and so we’re not paying anything for the potential growth in the business. If it is a tougher UK economy, it will be more insulated than others.
Where do you see opportunities, geographically, in the current market?
It’s all about finding great companies, we don’t care where they are. We have been overweight on American companies, which has been very different to many global funds – but that is because we happen to have found a lot of interesting opportunities in the US, not because I’m making a big call on the US.
While some fund managers focus on the short term, Laura Suter speaks to one who invests ‘super long-term’
You have 61pc of the fund invested in America. What impact will Donald Trump’s presidency have on your portfolio?
We own more “cyclical” companies, those that are more sensitive to the economy, that we feel have been unfairly penalised.
What we’ve seen with the Trump bounce in the market, is that people have become more open to thinking that, if there is fiscal stimulus or a fundamental economic bounce in the US, these businesses could benefit.
What would you have done if you hadn’t become a fund manager?
I started at the Bank of England on the graduate programme, so early-20s me would have ended up in development economics or staying at the Bank. But, as for 44-year-old Louise, I would now be a stay-at-home mum, although I don’t think my children would like that particularly.
Do you have your own money in the fund?
Yes, all my liquid wealth. How to buy the fund as cheaply as possible
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