The Fund has merged into Garraway Global Equity Fund. Its last day as a sub-fund of TM Funds SICAV plc was 9th November 2017.
The investment objective of this UCITS Fund is to achieve long term capital growth by investing in an international basket of securities (predominantly equities) which the Investment Manager believes offer value to investors in terms of their market price in relation to their earnings.
The Fund will invest in a basket of global equity securities which in the opinion of the Investment Manager is best suited to achieve the Fund’s Investment objective. In implementing this investment policy, the Fund will seek to invest in companies which can provide higher than average risk adjusted returns over complete the market cycle. Therefore, the Fund Manager will employ a long term buy and hold investment strategy and shall make no attempt to try and time the market.
The Manager will instead focus on buying equity positions in companies which have high quality businesses with competitive advantages and that can deliver high sustainable capital and dividend growth over time. The fund manager will undertake a rigorous research driven bottom up investment process and will invest in companies that are able to consistently generate high rates of return on capital employed, are highly cash generative and lowly levered. It is anticipated that The Fund Manager will also be mindful as to not overpay for any security purchased within the Sub-Fund.
From a sector perspective, the Fund will not target any specific sector but the Fund’s investment strategy will favour higher allocations towards consumer staples and healthcare, whilst will likely be underweight in financials, telecoms and utilities.
In seeking to achieve the investment objectives, the Fund may be invested in equities, fixed income securities and exchange traded funds (ETFs) listed on any permitted securities exchange. It may also invest in inverse ETFs where in the opinion of the Investment Manager a particular market, markets or sector are overvalued to the point of representing a significant possibility of falling.
The Fund will not be targeting any particular region / sector, but will invest in those instruments, which in the opinion of the Investment Manager, are best suited to achieve the Fund’s investment objective.
Any income from dividends, coupons from bonds or interest from deposits will be accumulated within the Fund.
The Investment Manager has the discretion to determine the liquidity of the portfolio, mainly by deciding when, in its opinion it is prudent to hold cash deposits rather than other asset classes. However, this will occur only when the Investment Manager is of the opinion that market conditions warrant such a prudent approach. Such cash deposits may be held in any currency.
A bottom-up process based on a disciplined evaluation of companies through rigorous metric selection process. The Portfolio Managers (PMs) will invest in companies which are highly cash generative, have business models with durable competitive advantages and which can re-deploy capital at highly favourable rates of return.
The PMs run the Fund in a conservative manner, with an emphasis on traditional buy-and-hold, focusing more on achieving consistent returns with lower volatility. Typically, the PMs aim to achieve this by targeting companies with higher return on equity/assets and lower debt–to-equity, than market average and are more resilient to cyclical changes in the economic climate. Irrespective of the upside the PMs will seek companies with limited downside risks and they will thus solely invest in companies they fully understand and will as much as possible avoid investing in companies with high fair value uncertainty such as oil companies, banks, insurance companies etc.
In-depth due diligence and analysis is conducted to understand what effects the revenue streams and margins of companies. From a metrics perspective, the EV/EBITDA, Return on Capital Employed, Free Cash Flow to Debt, Assets to Equity, Price to Free Cash Flow and Price to Book are the mostly utilized ratios during security analysis stage. All this information is collated, calculated and documented in detailed security analysis reports prepared by the PMs.
Top-down factors are disregarded in portfolio construction with diversification (rather than formal controls) guiding geographical and sector weights. From a risk management perspective, this ensures that systematic risks of the Fund do not become overwhelming.
The two PMs do their own in-house research and analysis and are assisted by the investment manager’s operations team for administrative tasks. In depth security analysis reports are prepared by the PMs and they estimate a company’s worth in two stages, quality then price. Quality is defined about management, business focus, balance sheet and corporate governance. Price is calculated relative to key financial ratios, market, peer group and business prospects.