We believe that success in equity investing requires a high degree of specialism, with investment approaches honed to reflect the distinctive nuances of diverse stock markets. Consistent with this belief, we have created an environment in which talented investment teams can thrive, taking true accountability for their performance, while being unencumbered by an imposed ‘house view’ or investment style. Over time, we have built and nurtured capabilities across global, UK, European, Asian and emerging market equities, offering a multitude of long-only and long/short capabilities, and covering different parts of the market capitalisation spectrum.
The cornerstones of the approach are twofold: fundamental research into the companies in which we invest and a patient, long-term time horizon.
Many investors focus on the immediate outlook for companies and share prices. Quarterly result statements and the vagaries of current trading, together with concerns about the immediate direction of macroeconomic indicators, tend to drive share prices in the short term.
By contrast, our investment approach focuses on opportunities over a three to five year time horizon. Fundamental research into companies and their prospects over the long term seek to identify both winning business models and significant turnaround situations.
Merian Global Investors’ UK large-cap equity team, headed by Richard Buxton, consists of four fund managers and four dedicated analysts. The broader UK equities team of 15 investment professionals offers capabilities in small- and mid-cap, large-cap, equity income and equity absolute return investing.
Merian Global Investors’ UK small- and mid-cap equities team’s approach is based on the belief that its universe of companies is less well researched than large companies, which results in share price inefficiencies.
They believe that a flexible style encompassing, for example, a willingness to hold value and/or growth stocks, depending on the conditions and outlook, provides the greatest scope for sustained outperformance.
The team makes extensive use of external (top-down and bottom-up) input and overlays this with its own detailed analytical work to identify potential investment opportunities.
Our multi-award winning small and mid cap UK equity team includes four portfolio managers and two analysts.
Long-only, high conviction, large-cap UK equities
Managed by the highly-respected Richard Buxton, the strategy is focused on maximising long-term capital growth through a high conviction portfolio, concentrated on 35to 40 UK large-cap companies he believes have strong business models, healthy balance sheets and, as yet, unrecognised potential.
Long-only, small-cap UK equities
The strategy typically holds at least 80 per cent of its net asset value in smaller companies, defined as companies that are quoted on a regulated market and which have a market capitalisation no greater than the largest company in the Numis Smaller Companies Index at the time of initial investment.
Long/short, market directional mid/smaller UK companies
This unique strategy combines a focused portfolio of the best ideas from the Old Mutual UK small and mid cap funds with the ability to add short positions on an opportunistic basis. The fund has significant freedom to raise cash and increase short positions in adverse market conditions in order to provide enhanced downside protection relative to traditional long-only funds.
Long/short, low net market exposure, smaller UK companies
The strategy takes long and short positions mainly in UK equities outside the FTSE 100 Index, and seeks to deliver absolute returns in all market conditions. The fund is managed with low net exposure to the UK equity market. This provides the potential to deliver positive returns in both rising and falling markets, and with less volatility than traditional equity funds.
The team believes that stock selection is the key to alpha generation and that opportunities for capital growth are best exploited by identifying catalysts for change at a stock level. The team believes it is possible, in a concentrated portfolio, to select stocks in quality businesses, at compelling valuations with strong growth prospects. The team sees inefficiencies increase lower down the market capitalisation scale so portfolios are unconstrained by capitalisation and also by country and sector.
Led by the highly experienced Ian Ormiston, the European equity team includes portfolio manager Liam Nunn and research analyst Nikisha Mistry.
Long-only European (ex-UK) smaller companies
The strategy invests in European smaller companies and offers a blended investment style covering growth, value and quality. The manager believes that inefficiencies increase lower down the market capitalisation scale. Stocks are equally weighted with a view to enjoying diversification benefits and managing risk.
The MerianChina Equity Fund is managed by Ping An of China Asset Management (Hong Kong), part of Ping An, one of China’s (and the world’s) largest insurance groups. The fund aims to give investors access to a diversified portfolio that leverages the managers’ local knowledge to take advantage of opportunities in China. The managers pursue an approach that allows them to generate alpha from both quantitative and fundamental analysis. The fund invests predominantly in large and medium-sized companies, blending top-down allocation and bottom-up stock selection, with a disciplined risk management overlay.
The fund is co-managed by the highly experienced Vincent Che and Eddie Lau of Ping An of China Asset Management. The fund managers are supported by Brenda Tang, senior market strategist, Vivien Hu, senior research analyst, and Harrison Chiu, portfolio associate, equity investment. They hold regular calls and meetings with economists and regional experts across the Ping An group.
The managers focus on predominantly Chinese companies that, they believe, display potential for earnings growth. This is based on his view that positive earnings surprises drive outperformance. Companies that have a strong brand or franchise are also attractive, particularly in an economic downturn when businesses are more resilient. The managers will consider investing in companies listed in Hong Kong and Taiwan.
The overriding aim of the team is to invest in companies displaying quality at a reasonable price, quality being defined as companies with a defensible competitive advantage or ‘economic moat’, strong management team and displaying robust corporate governance characteristics. These attributes are typically found in companies with a high return on invested capital.
The team’s investment process has a strong bottom-up focus and it models all potential candidates for inclusion in the portfolio using a bespoke discounted cashflow model to establish intrinsic values. These are then compared with the prevailing market price to ascertain whether or not a discount exists. A discount typically justifies a buy recommendation.
The highly experienced team, headed by Nick Payne, includes fellow fund managers, Salman Siddiqui and Liz Fernandes.
Merian Global Emerging Markets Fund
The strategy invests across emerging and frontier markets through a high conviction portfolio of 30-40 companies that, the managers believe, possess strong business models, healthy balance sheets and, as yet, unrecognised investment potential.