GUINNESS GLOBAL INNOVATORS FUND: Good investing

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Guinness Global Innovators is a thematic investment fund with a twist. It first identifies the key drivers of future economic growth – and then searches out the top companies operating in these areas before investing in the very best. 

It’s an investment approach that managers at Guinness Asset Management have been fine tuning for more than 17 years – and one that has been applied to Global Innovators since its launch in late 2014. The results are impressive. Over the past five years, the fund has delivered a return of 139 per cent, compared to a 102 per cent return registered by the FTSE World Index. As for the last 12 months, the respective figures are 34 and 15 per cent. 

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One of the architects of the investment process is Dr Ian Mortimer who runs the fund alongside Matthew Page. ‘What investors are buying with this fund,’ he says, ‘is exposure to some of the biggest growth companies in the world – but crucially businesses that we believe will continue to grow.’ He remarks that many rival fund managers buy growth companies on the back of their records without properly examining their future prospects – which is key to future stock market success. 

Finding ‘winners’ is a three stage process. First, Guinness draws up a list of the major themes likely to dominate the global economy in the coming years irrespective of the underlying economic conditions. This is currently nine-theme strong although it is reviewed every year to include any new emerging trends. It includes robotics, advanced health care, fintech, clean energy and ‘the internet of things’.

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Managers, assisted by two analysts, then start looking at the best businesses to invest in – typically those with strong balance sheets unencumbered by debt and where earnings are very much in growth mode. 

‘We’re not interested in early stage companies,’ says Mortimer, ‘so a biotech stock yet to get regulatory approval for a new drug would not be on our radar.’ They will also not overpay for companies they like. 

A universe of 1,000 companies worldwide is boiled down to 500. From this list, the fund will invest in only 30, with each holding roughly the same size. The result is a fund not dependent upon a key stock. ‘We trim our winners as we go along,’ explains Mortimer. Currently, the portfolio is skewed towards the US with the strongest themes being advanced health care and clean energy. 

Holdings are usually kept for between three to five years, with the latest portfolio reshuffle being in March. Disposals then included shares in German automotive giant Continental, Japanese robotics specialist Fanuc and industrial conglomerate Siemens. Additions included Microsoft, Mastercard and Visa as well as American health care companies Thermo Fisher Scientific and Medtronic. A big contributor to the fund’s strong investment performance in recent months has been stakes in US-listed companies Applied Materials, KLA and Lam Research. ‘All three are involved in the semi-conductor space,’ says Mortimer. ‘It’s a thriving area given the advent of 5G and the internet of things.’

The fund’s size is around £280million and is not suitable for those looking to earn a dividend from their investment. The ongoing annual charge is 0.99 per cent. The stock market identification code is: BQXX3K8. 

In total, Guinness Asset Management manages assets of £2.4 billion from London. Unlike other investment houses that offer a broad fund choice, it specialises in global equities, energy and Asia. 

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