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The top performing global equity fund Tulloch backs
by Dylan Lobo on Mar 06, 2013 at 13:48
With an advisory board that packs a mighty punch and an enviable track record, Kennox Strategic Value fund is finally starting to gain a following.
The global equity fund, co-managed by Charles Heenan and Geoff Legg of asset manager Kennox Asset Management, has been quietly going about its business since the financial crisis, while bigger rivals extensively marketed their global funds as demand for overseas strategies grew.
The fund, which is the firm’s sole focus, was launched in July 2007 under Heenan and Legg. The advisory panel comprises First State’s Angus Tulloch (pictured), strategist and author Russell Napier and former Baillie Gifford European equity head Peter Hollis.
Kennox managing director and founding member Peter Boyle summarises the strategy’s philosophy. ‘Our approach is focus and patience; we will not chase markets,’ he said.
Heenan has 20 years’ experience in the industry, including seven years at First State where he worked as part of Tulloch’s emerging markets team. Meanwhile, Legg spent a large part of his career crunching numbers as an actuary with Towers Perrin.
The formula has produced some stunning success. Since its launch the fund has returned 68% versus a 27% increase in the MSCI World Index. Its maximum drawdown in the three years to the end of January was 8.5%, making it the 12th least risky fund out of the 246 funds with a comparable track record.
What is particularly impressive about the statistics behind this 26-stock fund is that Heenan and Legg’s attitude towards fund management remains incredibly basic, at a time when investors are being offered an increasingly complex array of products promising to defy market conditions.
‘We try to build a portfolio irrespective of markets and one that we are comfortable with,’ Heenan told Wealth Manager. ‘We think over a five to 10-year time horizon and invest in companies we believe have the capacity to deliver good absolute returns without much volatility. We invest in good companies where earnings have not peaked, where leverage is low and there is a decent dividend.’
However, the fund does not restrict its investment remit to dividend-paying companies. ‘If you’re getting paid to hold income it’s always attractive,’ said Legg. ‘However, if we find something that’s attractive with no income we will buy it.’
A scan of the fund’s holdings at the end of January underlines the scale of the investments. Its top positions include European financials firm Delta Lloyd, Japanese electronic components and printer manufacturing firm Star Micronics and North American energy producer Encana, alongside a holding in ETFS Physical Swiss Gold.
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