en-GB Mundy bring experience and longevity. Alastair Mundy has managed this strategy since August 2002, having joined Investec in 2000. He began his investment career in 1988 when he became part of Commercial Union’s fixed-interest team, giving him some fixed-income grounding that is relevant for the short-dated bonds held. He moved to the equity desk in 1991. When the group was ultimately swallowed up by what is now Aviva, Mundy worked for the group’s asset-management arm, Morley Fund Management, and stayed until he joined Investec. At Investec, Mundy also runs the Temple Bar investment trust and Investec Cautious Managed, which is managed in the same style, although it has a very different mandate and investment universe. He is head of the value investment team, which is a tight-knit team of eight. In addition to the above, the team also manages a long-short UK equity strategy as well as global equity mandates. Mundy is supported by Peter Lowery, David Lynch, and Celia Duncan on the UK side. The team members have good length of tenure, joining Mundy in 2004, 2003, and 2006, respectively, and each has over 20 years of total investment experience. The team is appropriately sized given the low-turnover investment approach and the initial screen, which meaningfully reduces the investable universe of stocks. Debate is actively encouraged on all stock recommendations, but Mundy is clearly the final decision-maker. A clearly value-orientated portfolio. The manager does not actively target a tracking error, and the strategy is essentially unconstrained, being built very much from the bottom up. Alastair Mundy’s contrarian investment style results in clear value characteristics versus the index. The investment approach is long-term, and thus there is relatively low turnover in the portfolio. Active position sizes at time of purchase are limited to plus 3% relative to the index (plus 1.5% for small caps), and there is a soft limit of 10% for the strategy’s allocation to FTSE Small Cap names. The stock-picking process can lead to significant sector biases for the portfolio relative to the index. As of March 2019, the largest deviations were the overweighting to industrials and the underweighting to consumer staples. The manager is also willing to hold cash in the portfolio if his investment opportunity set is limited. However, as of March 2019, cash and equivalents had been significantly reduced from around the 16% level in mid-2016. The manager has also tended to make use of the capacity to invest in overseas stocks, with around a 10% allocation typical. That continues to be the case, with the majority of that weighting in US companies. The manager has, however, maintained a short S&P 500 position to hedge out some of the US market exposure. This further decreased the equity market exposure of the strategy, but again the position has been reduced over recent times. Robust fundamental analysis and structured idea generation process. The investment approach entails purchasing shares in strategically well-placed companies when sentiment toward them is at or near its worst. The manager buys shares that, compared with their highs over the past seven years (excluding the past two years), have fallen at least 50% relative to the FTSE All-Share Index. To ensure that the strategy does not miss out on their recovery, they should also be no more than 5% above their relative low. Ideas passing this screening process are then subject to analysis by the team, including assessment of balance sheet strength, the companies’ competitive positions, and the wider industry environments, to assess whether current market concerns are company-specific, structural, or cyclical. Stock notes are written covering these aspects and taking input from company accounts, external analysts, and, in many instances, company management. Team debate of all notes is encouraged, with the aim of understanding whether they have a strong nonconsensus view and a large margin of safety. With regard to the latter, valuation is important, with the team using enterprise value/normalised earnings and generally a single-digit multiple to calculate fair value estimates. Purchase prices should allow a 50% upside to fair value, and downside potential is also considered. The manager looks to sell holdings when they reach fair value. Supporting Player. The strategy’s value bias means returns can look out of step versus the index and mainstream peers for prolonged periods. Supporting Player Under review. Portfolio manager Alastair Mundy is to take an extended leave of absence from his role for health reasons. With immediate effect, Alessandro Dicorrado and Steve Woolley have been appointed as co-portfolio managers of Investec UK Special Situations. They have been comanagers on the Global strategy run by the team since 2016. Given Mundy was an important factor in our conviction in the strategy, we have placed the fund’s Morningstar Analyst Rating under review while we assess the impact of the news. We will provide further updates in due course. We wish Alastair the very best for his recovery. The remainder of this report refers to our previous update from 2019.
Experienced portfolio manager Alastair Mundy has managed the strategy since 2002 and is head of the value team at Investec. For UK stocks, he is supported by an experienced team of three. Debate is actively encouraged on all stock recommendations, but Mundy is clearly the final decision-maker regarding the composition of this portfolio. Given the low-turnover investment approach and the initial screen, which meaningfully reduces the investable universe of stocks, we believe this level of resourcing is appropriate.
Mundy and the team use a well-established contrarian process that seeks to invest in companies whose share prices have seen significant falls relative to the market. Such a strategy comes with the risk of investing in “value traps,” but they look to limit this by building a thorough understanding of business and balance sheet fundamentals. The idea generation framework is structured, and the fundamental stock research conducted is robust. Although the strategy will hold names at different stages of recovery, the process leads to a persistent value bias in aggregate.
Returns over the long term have been strong, but medium-term performance has been less impressive. There was some weakness in stock selection, and this was exacerbated during equity rallies by the strategy’s relatively low market exposure. A combination of the process and its implementation was the cause; the lack of ideas that passed the screening and valuation criteria led the manager to raise cash and near-cash positions. However, there have been additions to the portfolio over the past couple of years that have gradually reduced the cash position and thus its impact on returns. 1820 1820 Simon Dorricott Simon Dorricott, CFA Investec Asset Management is a profitable and independent subsidiary of the larger Investec financial services group. Investment managers and strategies are divided between the two primary investment centres in Cape Town and London. Equity strategies comprise nearly half of assets under management, with the remainder in fixed-income and multi-asset funds. Within equities, the group offers three main strategies with their own distinct investment styles. With regard to remuneration, teams share in a fixed percentage of revenues linked to their investment activities. Bonuses are then based on individual performance and manager discretion. The asset-management team is large, shows good levels of tenure, and offers a number of well-regarded funds with appealing track records. Senior management has been very stable; however, in 2018 a succession plan was announced with the asset management CEO moving up to group co-CEO in October 2018, replacing the outgoing founder Stephen Koseff. Although any level of change brings uncertainty, in this case we feel comfortable, as the group and asset-management firm have been able to appoint successors who have extensive senior-leadership histories with the group. From October 2018, the asset management CEO position will be jointly held by Domenico Ferrini (previously co-CIO) and John Green (previously global head of client group). There’s a lot to like at Investec. 2019-03-13T10:43:00 2019-03-13T15:43:00Z Longer-term performance impacted by weaker medium-term returns. From August 2002, when Alastair Mundy took charge, to the end of March 2019, the strategy comfortably outperformed its benchmark, the FTSE All-Share Index, and the UK flex-cap equity Morningstar Category average.
Despite the good long-term record, medium-term performance has been less impressive. The most significant factor has been the high cash and near-cash position resulting from a lack of compelling new ideas being generated, causing the strategy to lag in some of the strong equity rallies. This lack of market exposure has been compounded by a short S&P 500 position used to hedge US market returns. Given that both the cash and the S&P 500 short positions have been reduced more recently, they will be less of a factor in future relative performance.
In 2017, the strategy underperformed the index and category average. The low market exposure and the S&P 500 short position were headwinds, while stock selection in a number of sectors, including consumer staples and utilities, also detracted. In 2018, the strategy outperformed the category average but was slightly behind the index. Stock selection in consumer staples and utilities, in contrast to the previous year, contributed to relative returns, while stock selection in materials and real estate detracted. There was insufficient cost data available for this investment at time of publication. F000000IN6 Under review. Portfolio manager Alastair Mundy is to take an extended leave of absence from his role for health reasons. With immediate effect, Alessandro Dicorrado and Steve Woolley have been appointed as co-portfolio managers of Investec UK Special Situations. They have been comanagers on the Global strategy run by the team since 2016. Given Mundy was an important factor in our conviction in the strategy, we have placed the fund’s Morningstar Analyst Rating under review while we assess the impact of the news. We will provide further updates in due course. We wish Alastair the very best for his recovery. The remainder of this report refers to our previous update from 2019.
Experienced portfolio manager Alastair Mundy has managed the strategy since 2002 and is head of the value team at Investec. For UK stocks, he is supported by an experienced team of three. Debate is actively encouraged on all stock recommendations, but Mundy is clearly the final decision-maker regarding the composition of this portfolio. Given the low-turnover investment approach and the initial screen, which meaningfully reduces the investable universe of stocks, we believe this level of resourcing is appropriate.
Mundy and the team use a well-established contrarian process that seeks to invest in companies whose share prices have seen significant falls relative to the market. Such a strategy comes with the risk of investing in “value traps,” but they look to limit this by building a thorough understanding of business and balance sheet fundamentals. The idea generation framework is structured, and the fundamental stock research conducted is robust. Although the strategy will hold names at different stages of recovery, the process leads to a persistent value bias in aggregate.
Returns over the long term have been strong, but medium-term performance has been less impressive. There was some weakness in stock selection, and this was exacerbated during equity rallies by the strategy’s relatively low market exposure. A combination of the process and its implementation was the cause; the lack of ideas that passed the screening and valuation criteria led the manager to raise cash and near-cash positions. However, there have been additions to the portfolio over the past couple of years that have gradually reduced the cash position and thus its impact on returns. 1820 1820 Simon Dorricott Simon Dorricott, CFA Investec Asset Management is a profitable and independent subsidiary of the larger Investec financial services group. Investment managers and strategies are divided between the two primary investment centres in Cape Town and London. Equity strategies comprise nearly half of assets under management, with the remainder in fixed-income and multi-asset funds. Within equities, the group offers three main strategies with their own distinct investment styles. With regard to remuneration, teams share in a fixed percentage of revenues linked to their investment activities. Bonuses are then based on individual performance and manager discretion. The asset-management team is large, shows good levels of tenure, and offers a number of well-regarded funds with appealing track records. Senior management has been very stable; however, in 2018 a succession plan was announced with the asset management CEO moving up to group co-CEO in October 2018, replacing the outgoing founder Stephen Koseff. Although any level of change brings uncertainty, in this case we feel comfortable, as the group and asset-management firm have been able to appoint successors who have extensive senior-leadership histories with the group. From October 2018, the asset management CEO position will be jointly held by Domenico Ferrini (previously co-CIO) and John Green (previously global head of client group). There’s a lot to like at Investec. 2019-03-13T10:43:00 2019-03-13T15:43:00Z Longer-term performance impacted by weaker medium-term returns. From August 2002, when Alastair Mundy took charge, to the end of March 2019, the strategy comfortably outperformed its benchmark, the FTSE All-Share Index, and the UK flex-cap equity Morningstar Category average.
Despite the good long-term record, medium-term performance has been less impressive. The most significant factor has been the high cash and near-cash position resulting from a lack of compelling new ideas being generated, causing the strategy to lag in some of the strong equity rallies. This lack of market exposure has been compounded by a short S&P 500 position used to hedge US market returns. Given that both the cash and the S&P 500 short positions have been reduced more recently, they will be less of a factor in future relative performance.
In 2017, the strategy underperformed the index and category average. The low market exposure and the S&P 500 short position were headwinds, while stock selection in a number of sectors, including consumer staples and utilities, also detracted. In 2018, the strategy outperformed the category average but was slightly behind the index. Stock selection in consumer staples and utilities, in contrast to the previous year, contributed to relative returns, while stock selection in materials and real estate detracted. There was insufficient cost data available for this investment at time of publication. F00000MPGC Under review. Portfolio manager Alastair Mundy is to take an extended leave of absence from his role for health reasons. With immediate effect, Alessandro Dicorrado and Steve Woolley have been appointed as co-portfolio managers of Investec UK Special Situations. They have been comanagers on the Global strategy run by the team since 2016. Given Mundy was an important factor in our conviction in the strategy, we have placed the fund’s Morningstar Analyst Rating under review while we assess the impact of the news. We will provide further updates in due course. We wish Alastair the very best for his recovery. The remainder of this report refers to our previous update from 2019.
Experienced portfolio manager Alastair Mundy has managed the strategy since 2002 and is head of the value team at Investec. For UK stocks, he is supported by an experienced team of three. Debate is actively encouraged on all stock recommendations, but Mundy is clearly the final decision-maker regarding the composition of this portfolio. Given the low-turnover investment approach and the initial screen, which meaningfully reduces the investable universe of stocks, we believe this level of resourcing is appropriate.
Mundy and the team use a well-established contrarian process that seeks to invest in companies whose share prices have seen significant falls relative to the market. Such a strategy comes with the risk of investing in “value traps,” but they look to limit this by building a thorough understanding of business and balance sheet fundamentals. The idea generation framework is structured, and the fundamental stock research conducted is robust. Although the strategy will hold names at different stages of recovery, the process leads to a persistent value bias in aggregate.
Returns over the long term have been strong, but medium-term performance has been less impressive. There was some weakness in stock selection, and this was exacerbated during equity rallies by the strategy’s relatively low market exposure. A combination of the process and its implementation was the cause; the lack of ideas that passed the screening and valuation criteria led the manager to raise cash and near-cash positions. However, there have been additions to the portfolio over the past couple of years that have gradually reduced the cash position and thus its impact on returns. 1820 1820 Simon Dorricott Simon Dorricott, CFA Investec Asset Management is a profitable and independent subsidiary of the larger Investec financial services group. Investment managers and strategies are divided between the two primary investment centres in Cape Town and London. Equity strategies comprise nearly half of assets under management, with the remainder in fixed-income and multi-asset funds. Within equities, the group offers three main strategies with their own distinct investment styles. With regard to remuneration, teams share in a fixed percentage of revenues linked to their investment activities. Bonuses are then based on individual performance and manager discretion. The asset-management team is large, shows good levels of tenure, and offers a number of well-regarded funds with appealing track records. Senior management has been very stable; however, in 2018 a succession plan was announced with the asset management CEO moving up to group co-CEO in October 2018, replacing the outgoing founder Stephen Koseff. Although any level of change brings uncertainty, in this case we feel comfortable, as the group and asset-management firm have been able to appoint successors who have extensive senior-leadership histories with the group. From October 2018, the asset management CEO position will be jointly held by Domenico Ferrini (previously co-CIO) and John Green (previously global head of client group). There’s a lot to like at Investec. 2019-03-13T10:43:00 2019-03-13T15:43:00Z Longer-term performance impacted by weaker medium-term returns. From August 2002, when Alastair Mundy took charge, to the end of March 2019, the strategy comfortably outperformed its benchmark, the FTSE All-Share Index, and the UK flex-cap equity Morningstar Category average.
Despite the good long-term record, medium-term performance has been less impressive. The most significant factor has been the high cash and near-cash position resulting from a lack of compelling new ideas being generated, causing the strategy to lag in some of the strong equity rallies. This lack of market exposure has been compounded by a short S&P 500 position used to hedge US market returns. Given that both the cash and the S&P 500 short positions have been reduced more recently, they will be less of a factor in future relative performance.
In 2017, the strategy underperformed the index and category average. The low market exposure and the S&P 500 short position were headwinds, while stock selection in a number of sectors, including consumer staples and utilities, also detracted. In 2018, the strategy outperformed the category average but was slightly behind the index. Stock selection in consumer staples and utilities, in contrast to the previous year, contributed to relative returns, while stock selection in materials and real estate detracted. There was insufficient cost data available for this investment at time of publication. F0GBR04RO1 Under review. Portfolio manager Alastair Mundy is to take an extended leave of absence from his role for health reasons. With immediate effect, Alessandro Dicorrado and Steve Woolley have been appointed as co-portfolio managers of Investec UK Special Situations. They have been comanagers on the Global strategy run by the team since 2016. Given Mundy was an important factor in our conviction in the strategy, we have placed the fund’s Morningstar Analyst Rating under review while we assess the impact of the news. We will provide further updates in due course. We wish Alastair the very best for his recovery. The remainder of this report refers to our previous update from 2019.
Experienced portfolio manager Alastair Mundy has managed the strategy since 2002 and is head of the value team at Investec. For UK stocks, he is supported by an experienced team of three. Debate is actively encouraged on all stock recommendations, but Mundy is clearly the final decision-maker regarding the composition of this portfolio. Given the low-turnover investment approach and the initial screen, which meaningfully reduces the investable universe of stocks, we believe this level of resourcing is appropriate.
Mundy and the team use a well-established contrarian process that seeks to invest in companies whose share prices have seen significant falls relative to the market. Such a strategy comes with the risk of investing in “value traps,” but they look to limit this by building a thorough understanding of business and balance sheet fundamentals. The idea generation framework is structured, and the fundamental stock research conducted is robust. Although the strategy will hold names at different stages of recovery, the process leads to a persistent value bias in aggregate.
Returns over the long term have been strong, but medium-term performance has been less impressive. There was some weakness in stock selection, and this was exacerbated during equity rallies by the strategy’s relatively low market exposure. A combination of the process and its implementation was the cause; the lack of ideas that passed the screening and valuation criteria led the manager to raise cash and near-cash positions. However, there have been additions to the portfolio over the past couple of years that have gradually reduced the cash position and thus its impact on returns. 1820 1820 Simon Dorricott Simon Dorricott, CFA Investec Asset Management is a profitable and independent subsidiary of the larger Investec financial services group. Investment managers and strategies are divided between the two primary investment centres in Cape Town and London. Equity strategies comprise nearly half of assets under management, with the remainder in fixed-income and multi-asset funds. Within equities, the group offers three main strategies with their own distinct investment styles. With regard to remuneration, teams share in a fixed percentage of revenues linked to their investment activities. Bonuses are then based on individual performance and manager discretion. The asset-management team is large, shows good levels of tenure, and offers a number of well-regarded funds with appealing track records. Senior management has been very stable; however, in 2018 a succession plan was announced with the asset management CEO moving up to group co-CEO in October 2018, replacing the outgoing founder Stephen Koseff. Although any level of change brings uncertainty, in this case we feel comfortable, as the group and asset-management firm have been able to appoint successors who have extensive senior-leadership histories with the group. From October 2018, the asset management CEO position will be jointly held by Domenico Ferrini (previously co-CIO) and John Green (previously global head of client group). There’s a lot to like at Investec. 2019-03-13T10:43:00 2019-03-13T15:43:00Z Longer-term performance impacted by weaker medium-term returns. From August 2002, when Alastair Mundy took charge, to the end of March 2019, the strategy comfortably outperformed its benchmark, the FTSE All-Share Index, and the UK flex-cap equity Morningstar Category average.
Despite the good long-term record, medium-term performance has been less impressive. The most significant factor has been the high cash and near-cash position resulting from a lack of compelling new ideas being generated, causing the strategy to lag in some of the strong equity rallies. This lack of market exposure has been compounded by a short S&P 500 position used to hedge US market returns. Given that both the cash and the S&P 500 short positions have been reduced more recently, they will be less of a factor in future relative performance.
In 2017, the strategy underperformed the index and category average. The low market exposure and the S&P 500 short position were headwinds, while stock selection in a number of sectors, including consumer staples and utilities, also detracted. In 2018, the strategy outperformed the category average but was slightly behind the index. Stock selection in consumer staples and utilities, in contrast to the previous year, contributed to relative returns, while stock selection in materials and real estate detracted. There was insufficient cost data available for this investment at time of publication. F00000QJP1 Under review. Portfolio manager Alastair Mundy is to take an extended leave of absence from his role for health reasons. With immediate effect, Alessandro Dicorrado and Steve Woolley have been appointed as co-portfolio managers of Investec UK Special Situations. They have been comanagers on the Global strategy run by the team since 2016. Given Mundy was an important factor in our conviction in the strategy, we have placed the fund’s Morningstar Analyst Rating under review while we assess the impact of the news. We will provide further updates in due course. We wish Alastair the very best for his recovery. The remainder of this report refers to our previous update from 2019.
Experienced portfolio manager Alastair Mundy has managed the strategy since 2002 and is head of the value team at Investec. For UK stocks, he is supported by an experienced team of three. Debate is actively encouraged on all stock recommendations, but Mundy is clearly the final decision-maker regarding the composition of this portfolio. Given the low-turnover investment approach and the initial screen, which meaningfully reduces the investable universe of stocks, we believe this level of resourcing is appropriate.
Mundy and the team use a well-established contrarian process that seeks to invest in companies whose share prices have seen significant falls relative to the market. Such a strategy comes with the risk of investing in “value traps,” but they look to limit this by building a thorough understanding of business and balance sheet fundamentals. The idea generation framework is structured, and the fundamental stock research conducted is robust. Although the strategy will hold names at different stages of recovery, the process leads to a persistent value bias in aggregate.
Returns over the long term have been strong, but medium-term performance has been less impressive. There was some weakness in stock selection, and this was exacerbated during equity rallies by the strategy’s relatively low market exposure. A combination of the process and its implementation was the cause; the lack of ideas that passed the screening and valuation criteria led the manager to raise cash and near-cash positions. However, there have been additions to the portfolio over the past couple of years that have gradually reduced the cash position and thus its impact on returns. 1820 1820 Simon Dorricott Simon Dorricott, CFA Investec Asset Management is a profitable and independent subsidiary of the larger Investec financial services group. Investment managers and strategies are divided between the two primary investment centres in Cape Town and London. Equity strategies comprise nearly half of assets under management, with the remainder in fixed-income and multi-asset funds. Within equities, the group offers three main strategies with their own distinct investment styles. With regard to remuneration, teams share in a fixed percentage of revenues linked to their investment activities. Bonuses are then based on individual performance and manager discretion. The asset-management team is large, shows good levels of tenure, and offers a number of well-regarded funds with appealing track records. Senior management has been very stable; however, in 2018 a succession plan was announced with the asset management CEO moving up to group co-CEO in October 2018, replacing the outgoing founder Stephen Koseff. Although any level of change brings uncertainty, in this case we feel comfortable, as the group and asset-management firm have been able to appoint successors who have extensive senior-leadership histories with the group. From October 2018, the asset management CEO position will be jointly held by Domenico Ferrini (previously co-CIO) and John Green (previously global head of client group). There’s a lot to like at Investec. 2019-03-13T10:43:00 2019-03-13T15:43:00Z Longer-term performance impacted by weaker medium-term returns. From August 2002, when Alastair Mundy took charge, to the end of March 2019, the strategy comfortably outperformed its benchmark, the FTSE All-Share Index, and the UK flex-cap equity Morningstar Category average.
Despite the good long-term record, medium-term performance has been less impressive. The most significant factor has been the high cash and near-cash position resulting from a lack of compelling new ideas being generated, causing the strategy to lag in some of the strong equity rallies. This lack of market exposure has been compounded by a short S&P 500 position used to hedge US market returns. Given that both the cash and the S&P 500 short positions have been reduced more recently, they will be less of a factor in future relative performance.
In 2017, the strategy underperformed the index and category average. The low market exposure and the S&P 500 short position were headwinds, while stock selection in a number of sectors, including consumer staples and utilities, also detracted. In 2018, the strategy outperformed the category average but was slightly behind the index. Stock selection in consumer staples and utilities, in contrast to the previous year, contributed to relative returns, while stock selection in materials and real estate detracted. There was insufficient cost data available for this investment at time of publication. F00000PBNQ Under review. Portfolio manager Alastair Mundy is to take an extended leave of absence from his role for health reasons. With immediate effect, Alessandro Dicorrado and Steve Woolley have been appointed as co-portfolio managers of Investec UK Special Situations. They have been comanagers on the Global strategy run by the team since 2016. Given Mundy was an important factor in our conviction in the strategy, we have placed the fund’s Morningstar Analyst Rating under review while we assess the impact of the news. We will provide further updates in due course. We wish Alastair the very best for his recovery. The remainder of this report refers to our previous update from 2019.
Experienced portfolio manager Alastair Mundy has managed the strategy since 2002 and is head of the value team at Investec. For UK stocks, he is supported by an experienced team of three. Debate is actively encouraged on all stock recommendations, but Mundy is clearly the final decision-maker regarding the composition of this portfolio. Given the low-turnover investment approach and the initial screen, which meaningfully reduces the investable universe of stocks, we believe this level of resourcing is appropriate.
Mundy and the team use a well-established contrarian process that seeks to invest in companies whose share prices have seen significant falls relative to the market. Such a strategy comes with the risk of investing in “value traps,” but they look to limit this by building a thorough understanding of business and balance sheet fundamentals. The idea generation framework is structured, and the fundamental stock research conducted is robust. Although the strategy will hold names at different stages of recovery, the process leads to a persistent value bias in aggregate.
Returns over the long term have been strong, but medium-term performance has been less impressive. There was some weakness in stock selection, and this was exacerbated during equity rallies by the strategy’s relatively low market exposure. A combination of the process and its implementation was the cause; the lack of ideas that passed the screening and valuation criteria led the manager to raise cash and near-cash positions. However, there have been additions to the portfolio over the past couple of years that have gradually reduced the cash position and thus its impact on returns. 1820 1820 Simon Dorricott Simon Dorricott, CFA Investec Asset Management is a profitable and independent subsidiary of the larger Investec financial services group. Investment managers and strategies are divided between the two primary investment centres in Cape Town and London. Equity strategies comprise nearly half of assets under management, with the remainder in fixed-income and multi-asset funds. Within equities, the group offers three main strategies with their own distinct investment styles. With regard to remuneration, teams share in a fixed percentage of revenues linked to their investment activities. Bonuses are then based on individual performance and manager discretion. The asset-management team is large, shows good levels of tenure, and offers a number of well-regarded funds with appealing track records. Senior management has been very stable; however, in 2018 a succession plan was announced with the asset management CEO moving up to group co-CEO in October 2018, replacing the outgoing founder Stephen Koseff. Although any level of change brings uncertainty, in this case we feel comfortable, as the group and asset-management firm have been able to appoint successors who have extensive senior-leadership histories with the group. From October 2018, the asset management CEO position will be jointly held by Domenico Ferrini (previously co-CIO) and John Green (previously global head of client group). There’s a lot to like at Investec. 2019-03-13T10:43:00 2019-03-13T15:43:00Z Longer-term performance impacted by weaker medium-term returns. From August 2002, when Alastair Mundy took charge, to the end of March 2019, the strategy comfortably outperformed its benchmark, the FTSE All-Share Index, and the UK flex-cap equity Morningstar Category average.
Despite the good long-term record, medium-term performance has been less impressive. The most significant factor has been the high cash and near-cash position resulting from a lack of compelling new ideas being generated, causing the strategy to lag in some of the strong equity rallies. This lack of market exposure has been compounded by a short S&P 500 position used to hedge US market returns. Given that both the cash and the S&P 500 short positions have been reduced more recently, they will be less of a factor in future relative performance.
In 2017, the strategy underperformed the index and category average. The low market exposure and the S&P 500 short position were headwinds, while stock selection in a number of sectors, including consumer staples and utilities, also detracted. In 2018, the strategy outperformed the category average but was slightly behind the index. Stock selection in consumer staples and utilities, in contrast to the previous year, contributed to relative returns, while stock selection in materials and real estate detracted. There was insufficient cost data available for this investment at time of publication. F00000V4G0 Under review. Portfolio manager Alastair Mundy is to take an extended leave of absence from his role for health reasons. With immediate effect, Alessandro Dicorrado and Steve Woolley have been appointed as co-portfolio managers of Investec UK Special Situations. They have been comanagers on the Global strategy run by the team since 2016. Given Mundy was an important factor in our conviction in the strategy, we have placed the fund’s Morningstar Analyst Rating under review while we assess the impact of the news. We will provide further updates in due course. We wish Alastair the very best for his recovery. The remainder of this report refers to our previous update from 2019.
Experienced portfolio manager Alastair Mundy has managed the strategy since 2002 and is head of the value team at Investec. For UK stocks, he is supported by an experienced team of three. Debate is actively encouraged on all stock recommendations, but Mundy is clearly the final decision-maker regarding the composition of this portfolio. Given the low-turnover investment approach and the initial screen, which meaningfully reduces the investable universe of stocks, we believe this level of resourcing is appropriate.
Mundy and the team use a well-established contrarian process that seeks to invest in companies whose share prices have seen significant falls relative to the market. Such a strategy comes with the risk of investing in “value traps,” but they look to limit this by building a thorough understanding of business and balance sheet fundamentals. The idea generation framework is structured, and the fundamental stock research conducted is robust. Although the strategy will hold names at different stages of recovery, the process leads to a persistent value bias in aggregate.
Returns over the long term have been strong, but medium-term performance has been less impressive. There was some weakness in stock selection, and this was exacerbated during equity rallies by the strategy’s relatively low market exposure. A combination of the process and its implementation was the cause; the lack of ideas that passed the screening and valuation criteria led the manager to raise cash and near-cash positions. However, there have been additions to the portfolio over the past couple of years that have gradually reduced the cash position and thus its impact on returns. 1820 1820 Simon Dorricott Simon Dorricott, CFA Investec Asset Management is a profitable and independent subsidiary of the larger Investec financial services group. Investment managers and strategies are divided between the two primary investment centres in Cape Town and London. Equity strategies comprise nearly half of assets under management, with the remainder in fixed-income and multi-asset funds. Within equities, the group offers three main strategies with their own distinct investment styles. With regard to remuneration, teams share in a fixed percentage of revenues linked to their investment activities. Bonuses are then based on individual performance and manager discretion. The asset-management team is large, shows good levels of tenure, and offers a number of well-regarded funds with appealing track records. Senior management has been very stable; however, in 2018 a succession plan was announced with the asset management CEO moving up to group co-CEO in October 2018, replacing the outgoing founder Stephen Koseff. Although any level of change brings uncertainty, in this case we feel comfortable, as the group and asset-management firm have been able to appoint successors who have extensive senior-leadership histories with the group. From October 2018, the asset management CEO position will be jointly held by Domenico Ferrini (previously co-CIO) and John Green (previously global head of client group). There’s a lot to like at Investec. 2019-03-13T10:43:00 2019-03-13T15:43:00Z Longer-term performance impacted by weaker medium-term returns. From August 2002, when Alastair Mundy took charge, to the end of March 2019, the strategy comfortably outperformed its benchmark, the FTSE All-Share Index, and the UK flex-cap equity Morningstar Category average.
Despite the good long-term record, medium-term performance has been less impressive. The most significant factor has been the high cash and near-cash position resulting from a lack of compelling new ideas being generated, causing the strategy to lag in some of the strong equity rallies. This lack of market exposure has been compounded by a short S&P 500 position used to hedge US market returns. Given that both the cash and the S&P 500 short positions have been reduced more recently, they will be less of a factor in future relative performance.
In 2017, the strategy underperformed the index and category average. The low market exposure and the S&P 500 short position were headwinds, while stock selection in a number of sectors, including consumer staples and utilities, also detracted. In 2018, the strategy outperformed the category average but was slightly behind the index. Stock selection in consumer staples and utilities, in contrast to the previous year, contributed to relative returns, while stock selection in materials and real estate detracted. There was insufficient cost data available for this investment at time of publication. F00000V4G1 Under review. Portfolio manager Alastair Mundy is to take an extended leave of absence from his role for health reasons. With immediate effect, Alessandro Dicorrado and Steve Woolley have been appointed as co-portfolio managers of Investec UK Special Situations. They have been comanagers on the Global strategy run by the team since 2016. Given Mundy was an important factor in our conviction in the strategy, we have placed the fund’s Morningstar Analyst Rating under review while we assess the impact of the news. We will provide further updates in due course. We wish Alastair the very best for his recovery. The remainder of this report refers to our previous update from 2019.
Experienced portfolio manager Alastair Mundy has managed the strategy since 2002 and is head of the value team at Investec. For UK stocks, he is supported by an experienced team of three. Debate is actively encouraged on all stock recommendations, but Mundy is clearly the final decision-maker regarding the composition of this portfolio. Given the low-turnover investment approach and the initial screen, which meaningfully reduces the investable universe of stocks, we believe this level of resourcing is appropriate.
Mundy and the team use a well-established contrarian process that seeks to invest in companies whose share prices have seen significant falls relative to the market. Such a strategy comes with the risk of investing in “value traps,” but they look to limit this by building a thorough understanding of business and balance sheet fundamentals. The idea generation framework is structured, and the fundamental stock research conducted is robust. Although the strategy will hold names at different stages of recovery, the process leads to a persistent value bias in aggregate.
Returns over the long term have been strong, but medium-term performance has been less impressive. There was some weakness in stock selection, and this was exacerbated during equity rallies by the strategy’s relatively low market exposure. A combination of the process and its implementation was the cause; the lack of ideas that passed the screening and valuation criteria led the manager to raise cash and near-cash positions. However, there have been additions to the portfolio over the past couple of years that have gradually reduced the cash position and thus its impact on returns. 1820 1820 Simon Dorricott Simon Dorricott, CFA Investec Asset Management is a profitable and independent subsidiary of the larger Investec financial services group. Investment managers and strategies are divided between the two primary investment centres in Cape Town and London. Equity strategies comprise nearly half of assets under management, with the remainder in fixed-income and multi-asset funds. Within equities, the group offers three main strategies with their own distinct investment styles. With regard to remuneration, teams share in a fixed percentage of revenues linked to their investment activities. Bonuses are then based on individual performance and manager discretion. The asset-management team is large, shows good levels of tenure, and offers a number of well-regarded funds with appealing track records. Senior management has been very stable; however, in 2018 a succession plan was announced with the asset management CEO moving up to group co-CEO in October 2018, replacing the outgoing founder Stephen Koseff. Although any level of change brings uncertainty, in this case we feel comfortable, as the group and asset-management firm have been able to appoint successors who have extensive senior-leadership histories with the group. From October 2018, the asset management CEO position will be jointly held by Domenico Ferrini (previously co-CIO) and John Green (previously global head of client group). There’s a lot to like at Investec. 2019-03-13T10:43:00 2019-03-13T15:43:00Z Longer-term performance impacted by weaker medium-term returns. From August 2002, when Alastair Mundy took charge, to the end of March 2019, the strategy comfortably outperformed its benchmark, the FTSE All-Share Index, and the UK flex-cap equity Morningstar Category average.
Despite the good long-term record, medium-term performance has been less impressive. The most significant factor has been the high cash and near-cash position resulting from a lack of compelling new ideas being generated, causing the strategy to lag in some of the strong equity rallies. This lack of market exposure has been compounded by a short S&P 500 position used to hedge US market returns. Given that both the cash and the S&P 500 short positions have been reduced more recently, they will be less of a factor in future relative performance.
In 2017, the strategy underperformed the index and category average. The low market exposure and the S&P 500 short position were headwinds, while stock selection in a number of sectors, including consumer staples and utilities, also detracted. In 2018, the strategy outperformed the category average but was slightly behind the index. Stock selection in consumer staples and utilities, in contrast to the previous year, contributed to relative returns, while stock selection in materials and real estate detracted. There was insufficient cost data available for this investment at time of publication. F000013JAB Under review. Portfolio manager Alastair Mundy is to take an extended leave of absence from his role for health reasons. With immediate effect, Alessandro Dicorrado and Steve Woolley have been appointed as co-portfolio managers of Investec UK Special Situations. They have been comanagers on the Global strategy run by the team since 2016. Given Mundy was an important factor in our conviction in the strategy, we have placed the fund’s Morningstar Analyst Rating under review while we assess the impact of the news. We will provide further updates in due course. We wish Alastair the very best for his recovery. The remainder of this report refers to our previous update from 2019.
Experienced portfolio manager Alastair Mundy has managed the strategy since 2002 and is head of the value team at Investec. For UK stocks, he is supported by an experienced team of three. Debate is actively encouraged on all stock recommendations, but Mundy is clearly the final decision-maker regarding the composition of this portfolio. Given the low-turnover investment approach and the initial screen, which meaningfully reduces the investable universe of stocks, we believe this level of resourcing is appropriate.
Mundy and the team use a well-established contrarian process that seeks to invest in companies whose share prices have seen significant falls relative to the market. Such a strategy comes with the risk of investing in “value traps,” but they look to limit this by building a thorough understanding of business and balance sheet fundamentals. The idea generation framework is structured, and the fundamental stock research conducted is robust. Although the strategy will hold names at different stages of recovery, the process leads to a persistent value bias in aggregate.
Returns over the long term have been strong, but medium-term performance has been less impressive. There was some weakness in stock selection, and this was exacerbated during equity rallies by the strategy’s relatively low market exposure. A combination of the process and its implementation was the cause; the lack of ideas that passed the screening and valuation criteria led the manager to raise cash and near-cash positions. However, there have been additions to the portfolio over the past couple of years that have gradually reduced the cash position and thus its impact on returns. 1820 1820 Simon Dorricott Simon Dorricott, CFA Investec Asset Management is a profitable and independent subsidiary of the larger Investec financial services group. Investment managers and strategies are divided between the two primary investment centres in Cape Town and London. Equity strategies comprise nearly half of assets under management, with the remainder in fixed-income and multi-asset funds. Within equities, the group offers three main strategies with their own distinct investment styles. With regard to remuneration, teams share in a fixed percentage of revenues linked to their investment activities. Bonuses are then based on individual performance and manager discretion. The asset-management team is large, shows good levels of tenure, and offers a number of well-regarded funds with appealing track records. Senior management has been very stable; however, in 2018 a succession plan was announced with the asset management CEO moving up to group co-CEO in October 2018, replacing the outgoing founder Stephen Koseff. Although any level of change brings uncertainty, in this case we feel comfortable, as the group and asset-management firm have been able to appoint successors who have extensive senior-leadership histories with the group. From October 2018, the asset management CEO position will be jointly held by Domenico Ferrini (previously co-CIO) and John Green (previously global head of client group). There’s a lot to like at Investec. 2019-03-13T10:43:00 2019-03-13T15:43:00Z Longer-term performance impacted by weaker medium-term returns. From August 2002, when Alastair Mundy took charge, to the end of March 2019, the strategy comfortably outperformed its benchmark, the FTSE All-Share Index, and the UK flex-cap equity Morningstar Category average.
Despite the good long-term record, medium-term performance has been less impressive. The most significant factor has been the high cash and near-cash position resulting from a lack of compelling new ideas being generated, causing the strategy to lag in some of the strong equity rallies. This lack of market exposure has been compounded by a short S&P 500 position used to hedge US market returns. Given that both the cash and the S&P 500 short positions have been reduced more recently, they will be less of a factor in future relative performance.
In 2017, the strategy underperformed the index and category average. The low market exposure and the S&P 500 short position were headwinds, while stock selection in a number of sectors, including consumer staples and utilities, also detracted. In 2018, the strategy outperformed the category average but was slightly behind the index. Stock selection in consumer staples and utilities, in contrast to the previous year, contributed to relative returns, while stock selection in materials and real estate detracted. There was insufficient cost data available for this investment at time of publication. F0GBR066C6 Under review. Portfolio manager Alastair Mundy is to take an extended leave of absence from his role for health reasons. With immediate effect, Alessandro Dicorrado and Steve Woolley have been appointed as co-portfolio managers of Investec UK Special Situations. They have been comanagers on the Global strategy run by the team since 2016. Given Mundy was an important factor in our conviction in the strategy, we have placed the fund’s Morningstar Analyst Rating under review while we assess the impact of the news. We will provide further updates in due course. We wish Alastair the very best for his recovery. The remainder of this report refers to our previous update from 2019.
Experienced portfolio manager Alastair Mundy has managed the strategy since 2002 and is head of the value team at Investec. For UK stocks, he is supported by an experienced team of three. Debate is actively encouraged on all stock recommendations, but Mundy is clearly the final decision-maker regarding the composition of this portfolio. Given the low-turnover investment approach and the initial screen, which meaningfully reduces the investable universe of stocks, we believe this level of resourcing is appropriate.
Mundy and the team use a well-established contrarian process that seeks to invest in companies whose share prices have seen significant falls relative to the market. Such a strategy comes with the risk of investing in “value traps,” but they look to limit this by building a thorough understanding of business and balance sheet fundamentals. The idea generation framework is structured, and the fundamental stock research conducted is robust. Although the strategy will hold names at different stages of recovery, the process leads to a persistent value bias in aggregate.
Returns over the long term have been strong, but medium-term performance has been less impressive. There was some weakness in stock selection, and this was exacerbated during equity rallies by the strategy’s relatively low market exposure. A combination of the process and its implementation was the cause; the lack of ideas that passed the screening and valuation criteria led the manager to raise cash and near-cash positions. However, there have been additions to the portfolio over the past couple of years that have gradually reduced the cash position and thus its impact on returns. 1820 1820 Simon Dorricott Simon Dorricott, CFA Investec Asset Management is a profitable and independent subsidiary of the larger Investec financial services group. Investment managers and strategies are divided between the two primary investment centres in Cape Town and London. Equity strategies comprise nearly half of assets under management, with the remainder in fixed-income and multi-asset funds. Within equities, the group offers three main strategies with their own distinct investment styles. With regard to remuneration, teams share in a fixed percentage of revenues linked to their investment activities. Bonuses are then based on individual performance and manager discretion. The asset-management team is large, shows good levels of tenure, and offers a number of well-regarded funds with appealing track records. Senior management has been very stable; however, in 2018 a succession plan was announced with the asset management CEO moving up to group co-CEO in October 2018, replacing the outgoing founder Stephen Koseff. Although any level of change brings uncertainty, in this case we feel comfortable, as the group and asset-management firm have been able to appoint successors who have extensive senior-leadership histories with the group. From October 2018, the asset management CEO position will be jointly held by Domenico Ferrini (previously co-CIO) and John Green (previously global head of client group). There’s a lot to like at Investec. 2019-03-13T10:43:00 2019-03-13T15:43:00Z Longer-term performance impacted by weaker medium-term returns. From August 2002, when Alastair Mundy took charge, to the end of March 2019, the strategy comfortably outperformed its benchmark, the FTSE All-Share Index, and the UK flex-cap equity Morningstar Category average.
Despite the good long-term record, medium-term performance has been less impressive. The most significant factor has been the high cash and near-cash position resulting from a lack of compelling new ideas being generated, causing the strategy to lag in some of the strong equity rallies. This lack of market exposure has been compounded by a short S&P 500 position used to hedge US market returns. Given that both the cash and the S&P 500 short positions have been reduced more recently, they will be less of a factor in future relative performance.
In 2017, the strategy underperformed the index and category average. The low market exposure and the S&P 500 short position were headwinds, while stock selection in a number of sectors, including consumer staples and utilities, also detracted. In 2018, the strategy outperformed the category average but was slightly behind the index. Stock selection in consumer staples and utilities, in contrast to the previous year, contributed to relative returns, while stock selection in materials and real estate detracted. There was insufficient cost data available for this investment at time of publication. F0GBR066C7 Under review. Portfolio manager Alastair Mundy is to take an extended leave of absence from his role for health reasons. With immediate effect, Alessandro Dicorrado and Steve Woolley have been appointed as co-portfolio managers of Investec UK Special Situations. They have been comanagers on the Global strategy run by the team since 2016. Given Mundy was an important factor in our conviction in the strategy, we have placed the fund’s Morningstar Analyst Rating under review while we assess the impact of the news. We will provide further updates in due course. We wish Alastair the very best for his recovery. The remainder of this report refers to our previous update from 2019.
Experienced portfolio manager Alastair Mundy has managed the strategy since 2002 and is head of the value team at Investec. For UK stocks, he is supported by an experienced team of three. Debate is actively encouraged on all stock recommendations, but Mundy is clearly the final decision-maker regarding the composition of this portfolio. Given the low-turnover investment approach and the initial screen, which meaningfully reduces the investable universe of stocks, we believe this level of resourcing is appropriate.
Mundy and the team use a well-established contrarian process that seeks to invest in companies whose share prices have seen significant falls relative to the market. Such a strategy comes with the risk of investing in “value traps,” but they look to limit this by building a thorough understanding of business and balance sheet fundamentals. The idea generation framework is structured, and the fundamental stock research conducted is robust. Although the strategy will hold names at different stages of recovery, the process leads to a persistent value bias in aggregate.
Returns over the long term have been strong, but medium-term performance has been less impressive. There was some weakness in stock selection, and this was exacerbated during equity rallies by the strategy’s relatively low market exposure. A combination of the process and its implementation was the cause; the lack of ideas that passed the screening and valuation criteria led the manager to raise cash and near-cash positions. However, there have been additions to the portfolio over the past couple of years that have gradually reduced the cash position and thus its impact on returns. 1820 1820 Simon Dorricott Simon Dorricott, CFA Investec Asset Management is a profitable and independent subsidiary of the larger Investec financial services group. Investment managers and strategies are divided between the two primary investment centres in Cape Town and London. Equity strategies comprise nearly half of assets under management, with the remainder in fixed-income and multi-asset funds. Within equities, the group offers three main strategies with their own distinct investment styles. With regard to remuneration, teams share in a fixed percentage of revenues linked to their investment activities. Bonuses are then based on individual performance and manager discretion. The asset-management team is large, shows good levels of tenure, and offers a number of well-regarded funds with appealing track records. Senior management has been very stable; however, in 2018 a succession plan was announced with the asset management CEO moving up to group co-CEO in October 2018, replacing the outgoing founder Stephen Koseff. Although any level of change brings uncertainty, in this case we feel comfortable, as the group and asset-management firm have been able to appoint successors who have extensive senior-leadership histories with the group. From October 2018, the asset management CEO position will be jointly held by Domenico Ferrini (previously co-CIO) and John Green (previously global head of client group). There’s a lot to like at Investec. 2019-03-13T10:43:00 2019-03-13T15:43:00Z Longer-term performance impacted by weaker medium-term returns. From August 2002, when Alastair Mundy took charge, to the end of March 2019, the strategy comfortably outperformed its benchmark, the FTSE All-Share Index, and the UK flex-cap equity Morningstar Category average.
Despite the good long-term record, medium-term performance has been less impressive. The most significant factor has been the high cash and near-cash position resulting from a lack of compelling new ideas being generated, causing the strategy to lag in some of the strong equity rallies. This lack of market exposure has been compounded by a short S&P 500 position used to hedge US market returns. Given that both the cash and the S&P 500 short positions have been reduced more recently, they will be less of a factor in future relative performance.
In 2017, the strategy underperformed the index and category average. The low market exposure and the S&P 500 short position were headwinds, while stock selection in a number of sectors, including consumer staples and utilities, also detracted. In 2018, the strategy outperformed the category average but was slightly behind the index. Stock selection in consumer staples and utilities, in contrast to the previous year, contributed to relative returns, while stock selection in materials and real estate detracted. There was insufficient cost data available for this investment at time of publication. F0GBR04RO4 Under review. Portfolio manager Alastair Mundy is to take an extended leave of absence from his role for health reasons. With immediate effect, Alessandro Dicorrado and Steve Woolley have been appointed as co-portfolio managers of Investec UK Special Situations. They have been comanagers on the Global strategy run by the team since 2016. Given Mundy was an important factor in our conviction in the strategy, we have placed the fund’s Morningstar Analyst Rating under review while we assess the impact of the news. We will provide further updates in due course. We wish Alastair the very best for his recovery. The remainder of this report refers to our previous update from 2019.
Experienced portfolio manager Alastair Mundy has managed the strategy since 2002 and is head of the value team at Investec. For UK stocks, he is supported by an experienced team of three. Debate is actively encouraged on all stock recommendations, but Mundy is clearly the final decision-maker regarding the composition of this portfolio. Given the low-turnover investment approach and the initial screen, which meaningfully reduces the investable universe of stocks, we believe this level of resourcing is appropriate.
Mundy and the team use a well-established contrarian process that seeks to invest in companies whose share prices have seen significant falls relative to the market. Such a strategy comes with the risk of investing in “value traps,” but they look to limit this by building a thorough understanding of business and balance sheet fundamentals. The idea generation framework is structured, and the fundamental stock research conducted is robust. Although the strategy will hold names at different stages of recovery, the process leads to a persistent value bias in aggregate.
Returns over the long term have been strong, but medium-term performance has been less impressive. There was some weakness in stock selection, and this was exacerbated during equity rallies by the strategy’s relatively low market exposure. A combination of the process and its implementation was the cause; the lack of ideas that passed the screening and valuation criteria led the manager to raise cash and near-cash positions. However, there have been additions to the portfolio over the past couple of years that have gradually reduced the cash position and thus its impact on returns. 1820 1820 Simon Dorricott Simon Dorricott, CFA Investec Asset Management is a profitable and independent subsidiary of the larger Investec financial services group. Investment managers and strategies are divided between the two primary investment centres in Cape Town and London. Equity strategies comprise nearly half of assets under management, with the remainder in fixed-income and multi-asset funds. Within equities, the group offers three main strategies with their own distinct investment styles. With regard to remuneration, teams share in a fixed percentage of revenues linked to their investment activities. Bonuses are then based on individual performance and manager discretion. The asset-management team is large, shows good levels of tenure, and offers a number of well-regarded funds with appealing track records. Senior management has been very stable; however, in 2018 a succession plan was announced with the asset management CEO moving up to group co-CEO in October 2018, replacing the outgoing founder Stephen Koseff. Although any level of change brings uncertainty, in this case we feel comfortable, as the group and asset-management firm have been able to appoint successors who have extensive senior-leadership histories with the group. From October 2018, the asset management CEO position will be jointly held by Domenico Ferrini (previously co-CIO) and John Green (previously global head of client group). There’s a lot to like at Investec. 2019-03-13T10:43:00 2019-03-13T15:43:00Z Longer-term performance impacted by weaker medium-term returns. From August 2002, when Alastair Mundy took charge, to the end of March 2019, the strategy comfortably outperformed its benchmark, the FTSE All-Share Index, and the UK flex-cap equity Morningstar Category average.
Despite the good long-term record, medium-term performance has been less impressive. The most significant factor has been the high cash and near-cash position resulting from a lack of compelling new ideas being generated, causing the strategy to lag in some of the strong equity rallies. This lack of market exposure has been compounded by a short S&P 500 position used to hedge US market returns. Given that both the cash and the S&P 500 short positions have been reduced more recently, they will be less of a factor in future relative performance.
In 2017, the strategy underperformed the index and category average. The low market exposure and the S&P 500 short position were headwinds, while stock selection in a number of sectors, including consumer staples and utilities, also detracted. In 2018, the strategy outperformed the category average but was slightly behind the index. Stock selection in consumer staples and utilities, in contrast to the previous year, contributed to relative returns, while stock selection in materials and real estate detracted. There was insufficient cost data available for this investment at time of publication. F000013Z5Z Under review. Portfolio manager Alastair Mundy is to take an extended leave of absence from his role for health reasons. With immediate effect, Alessandro Dicorrado and Steve Woolley have been appointed as co-portfolio managers of Investec UK Special Situations. They have been comanagers on the Global strategy run by the team since 2016. Given Mundy was an important factor in our conviction in the strategy, we have placed the fund’s Morningstar Analyst Rating under review while we assess the impact of the news. We will provide further updates in due course. We wish Alastair the very best for his recovery. The remainder of this report refers to our previous update from 2019.
Experienced portfolio manager Alastair Mundy has managed the strategy since 2002 and is head of the value team at Investec. For UK stocks, he is supported by an experienced team of three. Debate is actively encouraged on all stock recommendations, but Mundy is clearly the final decision-maker regarding the composition of this portfolio. Given the low-turnover investment approach and the initial screen, which meaningfully reduces the investable universe of stocks, we believe this level of resourcing is appropriate.
Mundy and the team use a well-established contrarian process that seeks to invest in companies whose share prices have seen significant falls relative to the market. Such a strategy comes with the risk of investing in “value traps,” but they look to limit this by building a thorough understanding of business and balance sheet fundamentals. The idea generation framework is structured, and the fundamental stock research conducted is robust. Although the strategy will hold names at different stages of recovery, the process leads to a persistent value bias in aggregate.
Returns over the long term have been strong, but medium-term performance has been less impressive. There was some weakness in stock selection, and this was exacerbated during equity rallies by the strategy’s relatively low market exposure. A combination of the process and its implementation was the cause; the lack of ideas that passed the screening and valuation criteria led the manager to raise cash and near-cash positions. However, there have been additions to the portfolio over the past couple of years that have gradually reduced the cash position and thus its impact on returns. 1820 1820 Simon Dorricott Simon Dorricott, CFA Investec Asset Management is a profitable and independent subsidiary of the larger Investec financial services group. Investment managers and strategies are divided between the two primary investment centres in Cape Town and London. Equity strategies comprise nearly half of assets under management, with the remainder in fixed-income and multi-asset funds. Within equities, the group offers three main strategies with their own distinct investment styles. With regard to remuneration, teams share in a fixed percentage of revenues linked to their investment activities. Bonuses are then based on individual performance and manager discretion. The asset-management team is large, shows good levels of tenure, and offers a number of well-regarded funds with appealing track records. Senior management has been very stable; however, in 2018 a succession plan was announced with the asset management CEO moving up to group co-CEO in October 2018, replacing the outgoing founder Stephen Koseff. Although any level of change brings uncertainty, in this case we feel comfortable, as the group and asset-management firm have been able to appoint successors who have extensive senior-leadership histories with the group. From October 2018, the asset management CEO position will be jointly held by Domenico Ferrini (previously co-CIO) and John Green (previously global head of client group). There’s a lot to like at Investec. 2019-03-13T10:43:00 2019-03-13T15:43:00Z Longer-term performance impacted by weaker medium-term returns. From August 2002, when Alastair Mundy took charge, to the end of March 2019, the strategy comfortably outperformed its benchmark, the FTSE All-Share Index, and the UK flex-cap equity Morningstar Category average.
Despite the good long-term record, medium-term performance has been less impressive. The most significant factor has been the high cash and near-cash position resulting from a lack of compelling new ideas being generated, causing the strategy to lag in some of the strong equity rallies. This lack of market exposure has been compounded by a short S&P 500 position used to hedge US market returns. Given that both the cash and the S&P 500 short positions have been reduced more recently, they will be less of a factor in future relative performance.
In 2017, the strategy underperformed the index and category average. The low market exposure and the S&P 500 short position were headwinds, while stock selection in a number of sectors, including consumer staples and utilities, also detracted. In 2018, the strategy outperformed the category average but was slightly behind the index. Stock selection in consumer staples and utilities, in contrast to the previous year, contributed to relative returns, while stock selection in materials and real estate detracted. There was insufficient cost data available for this investment at time of publication. F00000TV2C Live