JOHCM International Opportunities Fund (JOPSX)

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Fund Description

The JOHCM International Opportunities Fund is managed by Ben Leyland, senior fund manager, and Robert Lancastle, fund manager, supported by dedicated analyst Jasmeet Munday. The team seeks to generate high risk-adjusted returns with volatility below that of the broad market by focusing on high-quality, cash-flow-generative companies. They blend the best of quality investing with the best of value investing in order to avoid the two major sources of capital destruction at market turning points: overvaluation and overleverage. They prioritize businesses with strong franchises, strong balance sheets and the ability to create shareholder value by reinvesting in areas of competitive advantage, but they only commit capital where they see a favorable risk/reward ratio, i.e., limited downside and substantial upside on a 3- to 5-year horizon. They emphasize absolute rather than relative returns and are prepared to hold up to 20% cash in the fund when valuations are unattractive.

Investment Strategy

The team aims to deliver above-average risk-adjusted equity returns over the medium term. They believe this is best achieved by investing in a concentrated, unconstrained portfolio of attractively valued compound growth companies. They prioritize companies that are able to reliably generate cash flow and reinvest it at high marginal returns in order to grow their intrinsic value. As a result, the companies become more valuable over time. 

Investment Objective

The investment objective of the JOHCM International Opportunities Fund is to achieve long-term total return by investing in a concentrated portfolio of international equity securities. The Fund invests, under normal market conditions, primarily in equity securities of companies headquartered outside the U.S., including those in emerging markets. The Fund may invest in foreign companies of any size, including small- and mid-capitalization companies, in order to achieve its objective. Equity securities include common and preferred stocks, rights and warrants. The Fund may also invest in equity related instruments, such as equity linked notes and participation notes, all of which derive their value from equities. Equity linked notes and participation notes will be securitized, freely transferable and the Fund will not be leveraged as a result of investing in them. The portfolio typically contains 25 to 40 stocks,* with position sizes of 2% to 5%. The Fund is benchmarked against the MSCI EAFE Index, but their process is benchmark-agnostic: The team aims to cluster exposure around particularly attractive areas and have zero exposure to overleveraged or overvalued areas of the market. The process is biased toward larger-cap (>$5 billion) multinationals listed in developed markets.
*The number of stocks in the portfolio will be fewer than 50.

  • Ben Leyland

    Senior Fund Manager

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  • Robert Lancastle

    Senior Fund Manager

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  • Jasmeet Munday

    Analyst

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An introduction to the JOHCM International Opportunities Fund

Other International Equity Funds

JOHCM International Select Fund (JOHIX)

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 beh...

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Fund details

Data as at 31 October 2021
Fund size $3.54mn
Benchmark MSCI EAFE Index
Share classes
Institutional (Launch date) 30-September-2016
Minimum investment
Institutional $1,000,000
Fund codes
Fund Ticker Share Class Fund Number CUSIP
JOPSX Institutional 46653M872
Fees and Expenses
Fund Ticker Share Class Net Expense Ratio* Gross Expense Ratio*
JOPSX Institutional 0.88% 3.17%

*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 June 30, 2022.

Fund ratings

Data as at 31 October 2021
Morningstar Rating Rank
  Rank Percentile Rating
Overall Morningstar Rating™     2-Star
1 year 727/770 94%
3 years 591/691 82% 2-Star
5 years 536/591 88% 2-Star

Administration

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

Strategy Highlights

As at 30 September 2021

The portfolio underperformed over the quarter with stock selection effects the main source of weakness as our utilities, namely Enel and Iberdrola lagged amidst surging gas and electricity prices. Enel also suffered on the back of negative regulatory developments in Spain. Elsewhere Wartsila reversed some of its year-to-date gains while Continental also weighed on relative returns. Energy holdings SBM Offshore and Galp Energia were among the top performers amid the energy price strength.

The equity market has moved into “shoot first, ask questions later” mode. This reflects the combination of complacency and “no alternative” reluctance which had supported the unbroken rally from November to August. The major macro concern currently is stagflation, where inflation is driven by supply-side weakness, not demand-side strength. The difference is particularly important for cyclicals, which is why there are currently few hiding places. There are plenty of sector-specific issues emerging, which the market is having to digest - not least political and regulatory. The challenge is to work out which are genuine buying opportunities and which are value traps. As ever, diversification and balance sheet strength will be important differentiators.

Strong market leadership by either extreme tends to be a clear headwind for relative performance. Banks, energy and miners tend to be the most geared beneficiaries of an inflationary environment. On the other hand recent history provides plenty of examples of a narrowly tech/growth-led market which we have tended to underperform despite the solid growth profile of many of the companies in the portfolio. Clearly in absolute terms there is always risk from poor operational execution by any of our portfolio companies, although we mitigate this risk by focusing on diversified businesses with low operational and/or financial gearing. Finally, again in absolute terms, it is almost impossible to predict how we will perform in a disorderly market sell-off after a long period of complacency – although we would expect to perform well in relative terms, as we have done in previous periods.

The outlook for inflation and monetary policy is clearly going to be critical, as well as the ongoing post-Covid recovery. A calm ‘mid-cycle’ environment of gentle economic recovery likely allows for outperformance of quality names with idiosyncratic growth potential, as market leadership by either extreme growth or geared cyclicals becomes less dominant. There is plenty of potential for much greater volatility, especially if supply side tightness and disruption creates extreme commodity-led inflation and concerns about stagflation.

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

Total Return (%)

Data as at October 31, 2021
  1 Month Total Return 3 Month Total Return YTD Total Return 1 Year Total Return Cumulative Since Inception
Institutional Shares Net 2.20 -3.59 3.25 23.21 38.25
Benchmark 2.46 1.24 11.01 34.18 55.84

Annualised Return (%)

Data as at September 30, 2021
  1 Year 2 Year 3 Year 4 Year 5 Year 10 Year Annualized Since Inception
Institutional Shares Net 15.39 7.75 5.60 4.62 6.27 6.22
Benchmark 25.73 12.41 7.62 6.38 8.81 8.74

Monthly returns (%)

Data as at 31 October 2021
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
Fund 2016 -0.24 -3.28 -2.60 2.01 -4.13
Benchmark 2016 -0.29 -2.05 -1.99 3.42
Fund 2017 0.85 1.95 1.91 2.88 5.22 -0.99 2.18 1.26 1.32 0.71 -0.15 -0.18 18.17
Benchmark 2017 2.90 1.43 2.75 2.54 3.67 -0.18 2.88 -0.04 2.49 1.52 1.05 1.61 25.02
Fund 2018 1.56 -3.12 1.58 1.23 -1.02 -0.34 1.09 -0.66 1.23 -6.16 1.00 -3.88 -7.58
Benchmark 2018 5.02 -4.51 -1.80 2.28 -2.25 -1.22 2.46 -1.93 0.87 -7.96 -0.13 -4.85 -13.79
Fund 2019 5.08 2.00 1.63 2.83 -4.76 5.27 -2.07 -0.74 1.93 2.75 0.40 2.92 18.15
Benchmark 2019 6.57 2.55 0.63 2.81 -4.80 5.93 -1.27 -2.59 2.87 3.59 1.13 3.25 22.01
Fund 2020 -0.92 -6.55 -11.34 3.46 5.38 2.02 4.34 2.42 -2.90 -4.26 15.23 3.50 8.20
Benchmark 2020 -2.09 -9.04 -13.35 6.46 4.35 3.40 2.33 5.14 -2.60 -3.99 15.50 4.65 7.82
Fund 2021 -1.67 1.78 2.54 4.30 2.35 -1.98 -0.20 0.11 -5.82 2.20 3.25
Benchmark 2021 -1.07 2.24 2.30 3.01 3.59 -1.44 0.75 1.76 -2.90 2.46 11.01

Expense Ratio (%)

Data as at August 31, 2020
Share Class Gross Expense* Net Expense*
Advisor 3.27% 0.98%
Institutional 3.17% 0.88%
Investor 3.42% 1.13%

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 EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada. Any Indicies mentioned are unmanaged statistical composites of stock market performance. Investing in an index is not possible.

 

*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 June 30, 2022.

Top 10 holdings and active weights

Data as at 31 October 2021
Top 10 holdings
Sanofi 5.12%
Iberdrola 4.66%
Enel 4.42%
Deutsche Bérse 3.61%
Continental 3.41%
Thales Group 3.33%
Handelsbanken 3.29%
Reckitt Benckiser 3.20%
B&M European Value Retail 3.15%
Lancashire Holdings 3.12%
Top 10 active weights
Sanofi +5.12%
Iberdrola +4.26%
Enel +4.03%
Deutsche Börse +3.42%
Continental +3.34%
Thales Group +3.27%
Handelsbanken +3.20%
B&M European Value Retail +3.15%
Lancashire Holdings +3.12%
Wärtsilä +2.99%

Regional / Country breakdown

Data as at 31 October 2021
Portfolio Benchmark Relative
Finland 3.03% 1.01% 2.01%
France 12.79% 11.46% 1.33%
Germany 14.72% 8.97% 5.74%
Italy 4.42% 2.51% 1.91%
Japan 8.80% 22.91% -14.1%
Netherlands 4.13% 5.03% -0.9%
Spain 4.66% 2.38% 2.28%
Sweden 3.34% 3.77% -0.42%
United Kingdom 25.75% 14.55% 11.19%
United States 2.95% 0% 2.95%
Cash 1.25% 0% 1.25%

Sector breakdown

Data as at 31 October 2021
Portfolio Benchmark Relative
Consumer Staples 17.67% 10.21% 7.50%
Financials 13.65% 17.60% -3.90%
Utilities 13.63% 3.36% 10.20%
Industrials 13.35% 15.57% -2.20%
Consumer Discretionary 10.88% 12.88% -2.00%
Health Care 8.15% 12.66% -4.50%
Communication Services 7.82% 4.54% 3.30%
Materials 6.65% 7.31% -0.60%
Energy 4.40% 3.51% 0.90%
Information Technology 2.50% 9.65% -7.20%
Real Estate 0.00% 2.65% -2.70%
Cash 1.25% 0.00% 1.25%

Fund

As at noon Share class Currency CUSIP Number NAV Change Change % Previous
JOHCM International Select Fund 03/12/2021 Institutional USD 46653M849 31.90 0.03 0.09% 31.87
Investor USD 46653M823 31.88 0.03 0.09% 31.85
JOHCM Emerging Markets Opportunities Fund 03/12/2021 Advisor USD 46653M203 12.62 -0.05 -0.39% 12.67
Institutional USD 46653M104 12.66 -0.05 -0.39% 12.71
Investor USD 46653M302 12.60 -0.04 -0.32% 12.64
JOHCM Global Select Fund 03/12/2021 Advisor USD 46653M807 22.80 -0.19 -0.83% 22.99
Institutional USD 46653M708 22.87 -0.20 -0.87% 23.07
JOHCM Emerging Markets Small-Mid Cap Equity Fund 03/12/2021 Advisor USD 46653M500 18.48 0.11 0.60% 18.37
Institutional USD 46653M401 18.52 0.12 0.65% 18.40
JOHCM Global Income Builder Fund 03/12/2021 Advisor USD 46653M799 11.18 -0.02 -0.18% 11.20
Institutional USD 46653M815 11.18 -0.03 -0.27% 11.21
Investor USD 46653M781 11.17 -0.03 -0.27% 11.20
JOHCM International Opportunities Fund 03/12/2021 Institutional USD 46653M872 11.33 -0.04 -0.35% 11.37
JOHCM Credit Income Fund 03/12/2021 Institutional USD 46653M740 10.00 0.01 0.10% 9.99
Regnan Global Equity Impact Solutions 03/12/2021 Institutional USD 46653M716 9.14 -0.08 -0.87% 9.22
TSW High Yield Bond Fund 03/12/2021 Institutional USD 46653M65 9.92 0.01 0.10% 9.91

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 EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the US & Canada. Any Indicies mentioned are unmanaged statistical composites of stock market performance. Investing in an index is not possible.

 

*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 June 30, 2022.

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