The Janus Henderson Global Equity Fund (Unit Trust) recently reached a 10-year milestone as an unconstrained, concentrated and high conviction Global Equities Strategy. Fund Manager Gordon Mackay explains how the same disciplined investment approach has been employed over the last decade, which has provided strong absolute and relative performance.
- The fund seeks to invest in a portfolio of high quality and growing companies that are benefiting from long‑term secular trends
- Companies favoured are those identified as having the resilience to weather unforeseen events and a valuation that has the potential to generate attractive long‑term returns
- Since the implementation of the investment strategy on 10 May 2010 the fund has generated impressive absolute and relative returns over this 10‑year period
The fund has continued to employ the same disciplined investment approach since this strategy was first implemented on 10 May 2010. We continue to look for underappreciated, high quality companies, with favourable long‑term growth prospects, whose success is not tied to doing societal harm. When we invest, we do so with a ‘hold forever’ mindset as we seek to deliver attractive long‑term returns.
During the 10 years since the Global Equity investment strategy was first implemented on 10 May 2010, the fund has delivered a total return of 253.6%, significantly outperforming the MSCI All Country World Index return of 159.0% and the Investment Association (IA) Global Equity Peer Group average of 121.6%.
Source: Morningstar. I accumulation share class, net of fees, with gross income reinvested. Sterling based cumulative 10-year total returns to 10 May 2020. Past performance is not a guide to future performance.
Benefiting from secular trends
While we spend very little time on macroeconomic data or political cycles, nor attempt to predict the equity market reaction to those variables, we do believe that there are a number of more predictable long‑term secular trends and that these can be powerful tailwinds for the type of businesses we look for. For example, the disruption of traditional business models due to the transformation of the internet, the growth of paperless payments and the development of middle-class consumers within emerging markets are all trends that are both largely predictable and likely to play out over many years.
Having a genuinely long‑term approach too has been a key element in the success of the strategy over the last decade and has allowed the fund to avoid unnecessary transaction costs associated with frequent stock trading and shorter holding periods.
Companies that the fund has held since the strategy was implemented 10 years ago include Alphabet, the owner of Google, and Rightmove, the leading classifieds marketplace for residential housing in the UK. Both companies have benefited from the disruption of older business models by the internet. In the case of Alphabet, the company has evolved to be one of the most successful online advertising businesses globally, while the network effect that Rightmove has created has given it a dominant market share that has proven very difficult to compete against.
The long‑term secular trends that were identified in 2010 remain as relevant today and we think can continue to be a positive tailwind for some of the fund’s more recent purchases. Take Taiwan Semiconductor Manufacturing Company (TSMC) for example, which was purchased by the fund in 2017. TSMC is the global leader in semiconductor manufacturing and the only truly independent foundry, which has given it a strong competitive advantage versus peers. Greater levels of connectivity, data sharing, cloud computing and artificial intelligence over time has created an attractive backdrop for semiconductor demand, which TSMC appears well placed to serve. Similarly, the purchase of PayPal in 2019 has seen the company gain from the long‑term shift from cash to electronic payments and the growth of ecommerce.
Stringent investment criteria
There are many variables that are nigh on impossible to successfully predict on a consistent basis, such as how the stock market will perform in any given year, who will be the next president of the United States and what the next economic downturn will look like. Nevertheless, by continuing to focus on the more predictable long‑term secular trends and investing only in those companies capable of meeting our stringent investment criteria we believe this approach has the potential to continue to produce attractive returns for investors in the fund as it has done over the last decade.
Gordon Mackay joined Janus Henderson in September 2016 as a portfolio manager on the Global Equities Strategy. He was named as a co‑manager of the Janus Henderson Global Equity Fund (Unit Trust) in September 2019 and then became the sole fund manager from October 2019.
Index MSCI All Countries World Index
Index usage Target, Comparator
The MSCI All Countries World Index is a measure of the combined performance of large and medium sized companies from both developed and emerging stock markets around the world. It provides a useful comparison against which the Fund's performance can be assessed over time.
Peer group benchmark IA Global Equity
Peer group benchmark usage Comparator
The Investment Association (IA) groups funds with similar geographic and/or investment remit into sectors. The Fund's ranking within the sector (as calculated by a number of data providers) can be a useful performance comparison against other funds with similar aims.
Objective: The Fund aims to provide capital growth over the long term.
Performance target: To outperform the MSCI All Countries World Index by 2.5% per annum, before the deduction of charges, over any 5‑year period.
|Performance %||I Acc (Net)||Index||Peer group||Quartile ranking||I Acc (Gross)||Target (Gross)|
|5 years annualised||14.7%||12.3%||10.3%||1||15.5%||15.7%|
|10 years annualised||15.2%||11.9%||9.9%||1||16.2%||15.2%|
Source: at 30 June 2020 in sterling terms. © 2020 Morningstar. All rights reserved, performance is with gross income reinvested. Performance/performance target related data will display only where relevant to the share class inception date and annualised target time period.
|Discrete year performance||I Acc (Net)||Index||Peer group||I Acc (Gross)||Target (Gross)|
|30 Jun 2019 to 30 Jun 2020||12.3%||5.7%||5.0%||13.1%||8.9%|
|30 Jun 2018 to 30 Jun 2019||8.0%||10.3%||7.3%||8.8%||13.6%|
|30 Jun 2017 to 30 Jun 2018||12.7%||9.5%||9.4%||13.5%||12.8%|
|30 Jun 2016 to 30 Jun 2017||32.2%||22.9%||23.5%||33.2%||26.6%|
|30 Jun 2015 to 30 Jun 2016||9.8%||13.9%||7.4%||10.7%||17.3%|
Source: at 30 June 2020. © 2020 Morningstar. All rights reserved, performance is with gross income reinvested. Discrete performance data may change due to final dividend information being received after quarter end. Source for target returns (where applicable) – Janus Henderson. Where quartiles are shown, 1st quartile means the share class is ranked in the top 25% of share classes in its sector. Performance/performance target related data will display only where relevant to the share class inception date and annualised target time period. Please note the performance target is to be achieved over a specific annualised time period. Refer to the performance target wording within the objective. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
Please refer to the Key Investor Information Document (KIID) and Fund Prospectus for the full objective and investment policy.