Charlie Wapshott

The high conviction Sydney-based global asset manager, Claremont Global, is expanding the reach of its global equity fund – the unhedged Claremont Global Fund (ASX:CGUN) and the hedged Claremont Global Fund (ASX:CGHE) – by giving investors access to an exchange traded managed fund (ETMF) on the ASX.

Head of Claremont Global & co-Portfolio Manager Bob Desmond said the decision to reach out to the retail end of the market reflects growing investor demand for quality, high conviction global equity managers that have demonstrated consistent performance across a variety of market environments.

“High conviction certainly defines the investment philosophy of our $1.4 billion Fund. We own 10 to 15 of the highest-quality global businesses, targeting an 8 to 12 per cent absolute return a year, measured over five-to-seven years, while remaining focussed on long-term capital preservation.

It is an approach that has seen the (unhedged) fund deliver an average return of 17.0 per cent a year (net of fees and assumed reinvestment of distributions) over the last five years, generating a 4.6 per cent return above its benchmark per annum across the same period.*

“Our businesses have been tested over time, so when the inevitable adversity of recessions and bear markets appear, we are confident that the decline in their earnings (and value) is very likely to be temporary, thereby allowing our clients to stay the course.”

Head of Distribution Charlie Wapshott said Claremont Global recognised that ETFs are an excellent vehicle to tap into a retail market that is becoming more sophisticated.

“Since 2020, funds under management (FUM) in ETFs have nearly doubled while unit trust FUM has fallen by about 20 per cent over the same period.

Advisers are increasingly looking at ETFs for their clients, with 45 per cent of all SMSFs in Australia now holding ETFs and over 2 million people in the country investing in them.

This is increasing at a rate of about 7 per cent year on year. Over the coming year over 50 per cent of ETF investors intend to make an allocation to international equity ETFs.”¹

Claremont Global’s research process screens over 70k global companies and through the application of specific quantitative and specific exclusions, the list is narrowed down to approximately 150 companies, that may be suitable for investment. This is then narrowed further to an Approved List of around 40 businesses before selecting the final 10 to 15 for inclusion in the portfolio.

Desmond said this process also includes some very definite parameters about industry sectors and corporate characteristics. “We don’t participate in banks, pharmaceuticals, utilities, resources – basically anything that is leveraged, commoditised, overly complex or regulated.

Where we do invest is in essential non-leveraged financial services, well-established technology companies with proven business models, healthcare (but not pharmaceuticals), business service providers, niche high margin industrials and quality consumer brands. We look for dominant market positions, low cost to value customer propositions, an owner-managed culture, consistent earnings power, strong balance sheets and diversity in products and services.”

“Over the Fund’s 10-year investment journey, it has outperformed its benchmark – the MSCI AC World Accum Index ex-Aust – by 3.1 per cent a year and has never underperformed it. We believe this track record will stand the ETF in good stead in the retail market.”

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