Global Select Fund (JOGIX)

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Fund Description

Fund managers Christopher Lees and Nudgem Richyal believe stock markets are inefficient and aim to exploit market anomalies via an investment process that combines both top-down and bottom-up research. Their distinct “4-Dimensional” investment process (stocks, sectors, countries, time/change) focuses on the behaviour of each share price to determine whether the most important driver of each prospective investment is stock specific, sector or country-based. The fund invests in both developed global (including the United States) and emerging markets, with the fund managers frequently drawing upon the stocks ideas generated by JOHCM’s regional equity teams.

Investment Strategy
  • Christopher and Nudgem have a Growth at a Reasonable Price (GARP) investment philosophy, which is sometimes described as core with a growth bias. They aim for consistency of returns by exploiting multiple market anomalies/inefficiencies.
  • Four-dimensional investment process (stocks, sectors, countries, time/change) with factors weighted to what actually drives each share price.
  • Growth and value disciplines are combined to help avoid the volatility that can occur in a single-style strategy, therefore to obtain better risk-adjusted returns over the medium and long term.
  • They look for stocks, sectors and countries that have displayed long-term underperformance (3 to 5 years) followed by short-term outperformance (6 to 12 months).
Investment Objective

The investment objective of the Global Select Fund (the “Fund”) is to seek long-term capital appreciation.

The Fund invests, under normal circumstances, at least 80% of its assets in equity securities of U.S. and foreign companies. The Fund can invest without limit in foreign securities and can invest in any country, including countries with developing or emerging markets. The normally will invest in at least three countries (one of which may be the US) with at least 40% of its assets invested in countries other than the U.S. However, the Fund may invest at least 30% of its assets outside the U.S. when market conditions are favorable. Typically, the Fund invests in a number of different countries. The Fund is not required to allocate its investments in any set percentages in any particular countries. The Fund may invest in U.S. and foreign companies of any size, including small and mid-capitalization companies.

The "Adviser" (J O Hambro Capital Management Limited) seeks to identify and make investments in U.S. and foreign companies based on a multi-dimensional investment process, considering a number of factors, including growth, valuation, size, momentum, and beta. The Fund utilizes a core style with a modest growth tilt (or “GARP”) over all capitalization ranges. The Fund seeks those stocks, sectors, and countries with positive earnings surprises, sustainably high or increasing return on equity, and attractive valuations.

  • Christopher Lees

    Senior Fund Manager

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  • Nudgem Richyal

    Senior Fund Manager

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Fund details

Data as at 30 June 2022
Fund size $348.15mn
Strategy size $4.83bn
Benchmark MSCI AC World NR
Share classes
Institutional (Launch date) 21-March-2013
Advisor (Launch date) 21-March-2013
Minimum investment
Institutional $1,000,000
Advisor $0
Fund codes
Fund Ticker Share Class Fund Number CUSIP
JOGIX Institutional 382 46653M708
JOGEX Advisor 182 46653M807
Fees and Expenses
Fund Ticker Share Class Net Expense Ratio* Gross Expense Ratio*
JOGIX Institutional 0.98% 0.98%
JOGEX Advisor 1.05% 1.05%

*Expense ratios as stated in the latest prospectus. JOHCM (USA) Inc. has contractually agreed to waive fees and reimburse expenses so that the Net Total Operating Expenses do not exceed the stated amounts until January 28, 2023.

Fund ratings

Data as at 30 June 2022
Morningstar Rating Rank
  Rank Percentile Rating
1 year 162/363 44%
3 years 108/307 34% 3-Star
5 years 96/268 36% 3-Star
Morningstar Category World Stock

Morningstar rankings are based on Share class I and on total returns. Past performance does not guarantee future results. © 2022 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. 

The Morningstar Rating™ for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.  Ratings are for the share class shown only; other classes may vary.  

Administration

Investment Adviser J O Hambro Capital Management Limited
Transfer Agent Northern Trust
Custodian Northern Trust

Investment Background

As at 30 June 2022

 

Strategy Highlights

As at 30 June 2022

Performance and Transactions:

The fund underperformed its benchmark index in June, Q2 and year to date. In US$ terms, the MSCI All Country World Index fell -8.6% in June and has now fallen -20.9% this year. This is the worst first half of a calendar year in the 34-year history of the MSCI index. In June, every region and every global sector posted a negative return, with the best performing sectors year to date being hit the hardest. Inflation reached 40-year highs in many parts of the world, prompting central banks to hike interest rates more than expected, which focused investors’ attention on the prospects of a global recession. Consensus earnings growth forecasts remained surprisingly resilient year to date (which stopped us from getting bearish) so potential broad cuts to earnings expectations have the potential to weigh on equities in the second half and prompt a change in leadership from value/cyclical stocks to those growth/quality stocks whose earnings will be more resilient during the economic and earnings slowdown.

During the month, quarter and year to date we have underperformed for three main reasons. 1) Our investment process did not get defensive enough, so the beta of the portfolio was too high, 2) the ongoing growth to value factor rotation, which is a significant headwind for us as our investment process is 2/3rds growth/momentum and 1/3rd valuation, 3) underweight energy and overweight technology, particularly semiconductors.

What are we doing about it? 1) In Q2 we followed our top-down scorecard which increased healthcare and reduced technology. 2) We followed our sell process and “weeded out the losers.” 3) We are looking for new opportunities during this crisis (eg biotech and China are beginning to recover). Most of our semiconductor holdings had reported excellent earnings in Q1, but then started to lower future revenue and earnings guidance in Q2, so we followed our investment process and started selling these ‘cyclical growth stocks’ (eg Applied Materials, Mediatek, NXP, Wolfspeed) to purchase some new ‘stable growth stock’ in the healthcare sector (eg Elevance Health, Regeneron, Vertex), and ‘recovery growth stocks’ in the Chinese technology sector (eg Alibaba, Tencent). We also ‘weeded out the losers’ in Japan as several of our holdings became what we call ‘good houses in a bad neighborhood’ (eg Recruit, SBI Holdings).

 

Outlook and strategy:

Our evidence-based probability-adjusted investment process did not get defensive enough. We went from 70% bullish (30% bearish) to 60% bullish (40% bearish) at the beginning of the year as we thought inflation would peak in Q1, but we were wrong - not helped by the war in Ukraine and then the China lockdowns. In hindsight, we got oil wrong, which meant we got inflation and interest rates wrong.

We now assess a 50% probability of equity markets continuing their fall with healthcare our favorite low beta (defensive) sector; a 35% probability of markets rallying with some of the older ‘growth’ leaders such as large-cap profitable biotech and China technology stocks now our favorite high beta (offensive) recovery stocks; and a 15% probability of markets rallying with some of the newer ‘value’ leaders with commodity (not consumer or financial) stocks our favorite in this area.

Yes, we are in a bear market, but will it be a small, medium or big bear market? Small bear markets (Ursa Minor) are usually monetary tightening ‘valuation’ driven and average around -20%. Medium bear markets are usually recessionary ‘earnings’ driven and average around -30%. This is what the current bear market has evolved into at the end of Q2. Big bear markets (Ursa Major) are usually banking crisis driven and average around -50%, but we do not think this bear market will turn into a banking crisis. So our base case is now an earnings recession but not a banking crisis (ie -30% not -50% bear market).

We think the second half of this year will be very different from the first half, as markets are now on recession watch instead of inflation watch. We believe this bear market is now moving from the P to the E of the P/E ratio, and historically that is when our process usually performs better. For example, in 2019-2020 the negative earnings revisions got us defensive, but in 2022 earnings revisions remained positive until just a few weeks ago. Now that earnings revisions have only just turned negative, we expect significant earnings downgrades during the second half of 2022, and so we are focusing on quality compounders with rock solid balance sheets that we think can withstand the threats of rising interest rates, rising input costs, broken supply chains and slowing earnings growth.

Sources for all data: JOHCM/Bloomberg (unless otherwise stated).

Total Return (%)

Data as at June 30, 2022
  1 Month Total Return 3 Month Total Return YTD Total Return 1 Year Total Return Cumulative Since Inception
Advisor Shares Net -10.67 -18.91 -30.65 -23.19 111.71
Benchmark -10.70 -18.97 -30.66 -23.18 113.30

Annualised Return (%)

Data as at June 30, 2022
  1 Year 2 Year 3 Year 4 Year 5 Year 10 Year Annualized Since Inception
Advisor Shares Net -23.19 5.09 6.40 5.55 8.47 8.42
Benchmark -23.18 5.16 6.48 5.64 8.55 8.51

Monthly returns (%)

Data as at 30 June 2022
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
Fund 2013 1.20 1.58 1.46 -2.30 5.79 -1.39 6.96 3.34 4.05 4.48 27.75
Benchmark 2013 0.73 2.86 -0.27 -2.92 4.79 -2.08 5.17 4.02 1.42 1.73 16.15
Fund 2014 -1.97 7.12 -4.14 -0.99 4.55 3.49 -2.58 4.58 -1.65 -0.51 1.07 -1.46 7.06
Benchmark 2014 -4.00 4.83 0.44 0.95 2.13 1.88 -1.21 2.21 -3.24 0.70 1.67 -1.93 4.16
Fund 2015 1.62 7.08 -0.44 -1.07 3.99 -5.93 0.43 -8.91 -6.30 4.46 -1.37 -0.61 -7.98
Benchmark 2015 -1.56 5.57 -1.55 2.90 -0.13 -2.35 0.87 -6.86 -3.62 7.85 -0.83 -1.80 -2.36
Fund 2016 -3.49 -0.22 4.03 1.34 -0.83 2.38 4.49 -0.83 1.43 -1.58 -3.15 -0.99 2.27
Benchmark 2016 -6.03 -0.69 7.41 1.48 0.13 -0.61 4.31 0.34 0.61 -1.70 0.76 2.16 7.86
Fund 2017 6.65 -1.00 2.29 -0.35 0.98 0.84 4.40 1.78 1.07 3.07 0.43 2.80 25.22
Benchmark 2017 2.73 2.81 1.22 1.56 2.21 0.45 2.79 0.38 1.93 2.08 1.94 1.61 23.96
Fund 2018 7.28 -1.74 -0.31 -0.12 2.62 -1.75 0.93 -0.61 -1.19 -6.59 0.60 -6.21 -7.56
Benchmark 2018 5.64 -4.20 -2.14 0.95 0.12 -0.54 3.02 0.79 0.44 -7.49 1.46 -7.04 -9.42
Fund 2019 7.76 3.08 2.29 1.41 -4.51 7.24 0.53 -1.39 -0.45 0.21 2.85 2.22 22.70
Benchmark 2019 7.90 2.67 1.26 3.38 -5.93 6.55 0.29 -2.37 2.10 2.74 2.44 3.52 26.60
Fund 2020 0.19 -6.91 -10.11 12.13 8.51 2.79 6.74 4.24 -1.32 -1.70 12.18 5.10 33.43
Benchmark 2020 -1.10 -8.08 -13.50 10.71 4.35 3.20 5.29 6.12 -3.22 -2.43 12.33 4.64 16.26
Fund 2021 1.03 3.97 0.73 4.31 -0.20 2.60 2.01 2.45 -4.59 8.07 -1.05 3.86 25.16
Benchmark 2021 -0.45 2.32 2.67 4.37 1.51 1.36 0.69 2.50 -4.13 5.10 -2.41 4.00
Fund 2022 -12.05 -4.27 1.59 -10.74 1.70 -10.67 -30.65
Benchmark 2022 -4.91 -2.58 2.17

Expense Ratio (%)

Data as at February 28, 2022
Share Class Gross Expense* Net Expense*
Advisor 1.05% 1.05%
Institutional 0.98% 0.98%

Disclaimer

The performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data quoted. Investors may obtain performance information current to the most recent month-end, within 7 business days at www.johcm.com or by calling 866-260-9549 or 312-557-5913.

Returns shown, unless otherwise indicated, are total returns, with dividends and income reinvested. Returns for periods of less than one year are not annualized. Fee waivers are in effect; if they had not been in effect performance would have been lower.

The MSCI All Country World Index (ACWI) is a market-capitalization-weighted index composed of over 2,000 companies, and is representative of the market structure of 48 developed and emerging market countries in North and South American, Europe, Africa, and the Pacific Rim. The index is calculated with net dividends reinvested in U.S. dollars. Indexes mentioned are unmanaged statistical composites of stock market performance. Investing in an index is not possible. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.

*Expense ratios as stated in the latest prospectus. JOHCM (USA) Inc. has contractually agreed to waive fees and reimburse expenses so that the Net Total Operating Expenses do not exceed the stated amounts until January 28, 2023.

Top 10 holdings and active weights

Data as at 30 June 2022
Top 10 holdings
Novo Nordisk 3.15%
Chart Industries 2.75%
Catalent 2.75%
Thermo Fisher Scientific 2.74%
Estee Lauder Companies 2.73%
érsted 2.66%
Microsoft 2.62%
Morningstar 2.60%
Nasdaq 2.60%
Intuit 2.59%
Top 10 active weights
Novo Nordisk +2.81%
Chart Industries +2.75%
Catalent +2.71%
Ørsted +2.63%
Estee Lauder Companies +2.62%
Morningstar +2.60%
Nasdaq +2.57%
Keysight +2.53%
Henry Schein +2.50%
Intercontinental Exchange +2.48%

Regional / Country breakdown

Data as at 30 June 2022
Portfolio Benchmark Relative
Australia 2.14% 1.91% 0.22%
China 4.45% 4.14% 0.31%
Denmark 5.82% 0.67% 5.14%
Hong Kong 2.58% 0.81% 1.76%
Italy 2.30% 0.55% 1.75%
Japan 4.91% 5.44% -0.53%
Netherlands 4.80% 1% 3.8%
Sweden 2.27% 0.82% 1.45%
United Kingdom 2.28% 3.9% -1.62%
United States 64.91% 60.62% 4.28%
Cash 3.48% 0% 3.48%

Sector breakdown

Data as at 30 June 2022
Portfolio Benchmark Relative
Information Technology 24.11% 20.85% 3.20%
Health Care 23.46% 12.95% 10.50%
Financials 12.85% 14.49% -1.60%
Industrials 9.67% 9.39% 0.30%
Materials 9.19% 4.76% 4.40%
Consumer Discretionary 7.32% 11.06% -3.80%
Consumer Staples 2.73% 7.60% -4.90%
Utilities 2.66% 3.17% -0.50%
Energy 2.30% 4.98% -2.70%
Communication Services 2.15% 7.93% -5.70%
Real Estate 0.00% 2.76% -2.80%
Cash 3.48% 0.00% 3.48%

Market cap breakdown

Data as at 30 June 2022
Portfolio Benchmark Relative
Large 91.52% 92.74% -1.20%
Mid 7.47% 7.26% 0.20%
Small 0.00% 0.00% 0.00%

Disclaimer

Fund holdings, sector allocation, regional allocation and top 10 countries are subject to change without notification.

Fund

As at noon Share class Currency CUSIP Number NAV Change Change % Previous
JOHCM International Select Fund 12/08/2022 Institutional USD 46653M849 21.42 0.07 0.33% 21.35
Investor USD 46653M823 21.42 0.06 0.28% 21.36
JOHCM Emerging Markets Opportunities Fund 12/08/2022 Advisor USD 46653M203 10.72 0.13 1.23% 10.59
Institutional USD 46653M104 10.75 0.13 1.22% 10.62
Investor USD 46653M302 10.73 0.13 1.23% 10.60
JOHCM Global Select Fund 12/08/2022 Advisor USD 46653M807 15.03 0.17 1.14% 14.86
Institutional USD 46653M708 15.08 0.17 1.14% 14.91
JOHCM Emerging Markets Small-Mid Cap Equity Fund 12/08/2022 Advisor USD 46653M500 11.68 0.16 1.39% 11.52
Institutional USD 46653M401 11.69 0.16 1.39% 11.53
JOHCM Global Income Builder Fund 12/08/2022 Advisor USD 46653M799 10.11 0.08 0.80% 10.03
Institutional USD 46653M815 10.11 0.07 0.70% 10.04
Investor USD 46653M781 10.10 0.08 0.80% 10.02
JOHCM International Opportunities Fund 12/08/2022 Institutional USD 46653M872 9.66 0.01 0.10% 9.65
JOHCM Credit Income Fund 12/08/2022 Institutional USD 46653M740 9.15 0.01 0.11% 9.14
Regnan Global Equity Impact Solutions 12/08/2022 Institutional USD 46653M716 7.64 0.03 0.39% 7.61
TSW Large Cap Value Fund 12/08/2022 Institutional USD 46653M641 14.49 0.20 1.40% 14.29
TSW High Yield Bond Fund 12/08/2022 Institutional USD 46653M658 9.05 0.00 0.00% 9.05

Disclaimer

The performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data quoted. Investors may obtain performance information current to the most recent month-end, within 7 business days at www.johcm.com or by calling 866-260-9549 or 312-557-5913.

Returns shown, unless otherwise indicated, are total returns, with dividends and income reinvested. Returns for periods of less than one year are not annualized. Fee waivers are in effect; if they had not been in effect performance would have been lower.

The MSCI All Country World Index (ACWI) is a market-capitalization-weighted index composed of over 2,000 companies, and is representative of the market structure of 48 developed and emerging market countries in North and South American, Europe, Africa, and the Pacific Rim. The index is calculated with net dividends reinvested in U.S. dollars. Indexes mentioned are unmanaged statistical composites of stock market performance. Investing in an index is not possible. Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.

*Expense ratios as stated in the latest prospectus. JOHCM (USA) Inc. has contractually agreed to waive fees and reimburse expenses so that the Net Total Operating Expenses do not exceed the stated amounts until January 28, 2023.

07 Jul 2022

Quarterly Update from Christopher Lees

"Beware good houses in bad neighborhoods..."

10 Mar 2022

International Select - Monthly Report

Senior Fund Manager, Chris Lees, reviews the Ukraine invasion and his outlook and positioning for the future. 

17 Mar 2020

Think like a scientist - but which one and when?

Updated probability-based scenario analysis from the JOHCM International Select team

02 Mar 2020

Coronavirus: indiscriminate selling makes for opportunity

Thoughts on the coronavirus and the subsequent market correction from the JOHCM International Select Fund team. 

27 Aug 2019

Beating the machines - the Global Equity process

How to beat the investment machines? Chris Lees, manager of the the JOHCM Global Equity Fund, discusses the change in investment process in recent years.

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