‘It’s too big to ignore,’ that’s why financial advisor Hargreaves Lansdown is launching a US-focussed fund. The fund, an open-ended investment company (OEIC), will be managed externally by a team of fund managers who will oversee their own discrete portfolios and invest in US stocks for long-term growth. The fund will launch on 1st November and HL is offering clients the opportunity to invest pre-launch, at a GBP1 launch price for GBP100 or GBP25 by direct debit.
They have a point. The US does house the worlds’ two biggest stock markets – the NYSE and Nasdaq – which make up over half of the global stock market. Moreover, the US remains the world’s biggest economy and some of the largest global companies call America their home.
Ziad Gergi, senior fund manager for HL said: “We’re launching a new way to invest in the biggest market in the world. We’ve researched the market and partnered with a team of fund managers who each use a different strategy to make money in the market no investor can afford to ignore.”
He said the new fund will “hunt out” companies set to grow steadily over the long-term and business that are undervalued. Gergi said the fund will focus on large cap companies, but will have the opportunity to invest on an opportunistic basis in smaller, high-growth, higher risk businesses.
The fund will, he said, benefit from its multi-manager approach – offering different strategies that can make money in all business conditions – unlike in single-manager funds that can be vulnerable to cyclical changes. HL will be asset allocator in the multi-manager process.
After a process that analyses a wide universe of fund managers in the US, UK and Europe, HL eventually selected four US-based fund management groups. Each manager will have a unique philosophy and style, and the fund as a whole will be able to offer positive returns whether the market is in a Growth or a Value phase.
The four underlying managers are Alliance Bernstein, William Blair, JPMorgan and Neuberger Berman. Alliance Bernstein have a large-cap bias with a focus on defensive stocks, “highly profitable businesses that people will buy products from even in an economic downturn.” The fund manager, which has been running this strategy since 2012, typically has 40 to 60 large cap stocks in its portfolio, with about 30% of holdings investing in the top-10. Alliance Bernstein will, says Gergi, create the foundations of the fund by finding stocks that could grow in all market conditions.
Large Cap Bias
William Blair has been running its strategy since 2011. This fund manager scans the market for large cap, under-valued companies with profit growth potential greater than or equal to the overall economy and their own industries. This team is part of the fund to try and identify shares with high-growth potential and will hold around 30 to 40 stocks.
The most blue-chippy, blue chip name is JPMorgan, through fund manager, Clare Hart, who has been managing her fund since 2004. They are the Value providers, as Hart seeks quality companies with durable franchises, consistent earnings, and strong management, but won’t pay over the odds for companies that she doesn’t think have strong potential. Hart runs between 85 and 115 companies in her fund, and Hart’s role in the HL US Fund is to find undervalued stocks that could perform well in good or bad market conditions.
Finally, Neuberger Berman is also on the Value train. The fund manager research stocks to determine a value they think they could reach. Then they look at the steps that company could take, or economic changes that could happen, for that company to reach this value in the next year and a half. The Neuberger Berman strategy has been running since 2011 and is overseen by Eli Salzmann and David Levine who run a portfolio of 50 to 65 stocks with a high turnover.
HL markets the fund as one that could be used by people who are comfortable building their own portfolios or could fit well in a portfolio that would benefit from exposure to the US. The fund is diversified across various industrial sectors and aims to outperform its benchmark, the MSCI USA index, over the long-term – at least 5 years – after charges.
Based on a GBP1,000 investment the fund has the following charges:
- Initial charge 0%
- Ongoing charge 0.83%
- HL platform fee 0.45%
- Total Fee 1.28%
