AVIVA INVESTORS GLOBAL EQUITY ENDURANCE: Young fund passes test with 40% return since 2017 launch
Investment fund Aviva Investors Global Equity Endurance has just ‘celebrated’ its third anniversary.
And although Tier 4 restrictions in the South East prevented the joint managers from marking the anniversary with a glass of fizz in their City of London office, it’s been a job well done so far.
Since launch in late 2017, the fund has delivered a total return of 40 per cent – in excess of that of the FTSE World index.
Since launch in late 2017, the fund has delivered a total return of 40 per cent
And according to Giles Parkinson, who has been at the fund’s helm since launch – co-manager Stephanie Niven came on board in April 2019 – there’s no reason why the fund can’t continue to go from strength to strength.
The fund’s modus operandi is to scour the globe for companies that have ‘durable’ earnings – and whose shares are attractively priced (undervalued). It then holds the shares in the hope that they rise in value as the business’s durable earnings are recognised by the rest of the market.
Although some 3,000 companies are monitored by the managers, only 31 make it into the fund. ‘It’s a high conviction, low turnover fund,’ says Parkinson. ‘We go anywhere in the world in search of listed businesses to invest in – companies with predictable and sustainable earnings.’
The only proviso, he adds, is that no one holding can account for more than 8 per cent of the fund – and specific industry exposure is limited to 10 per cent.
The portfolio is dominated by some of the world’s leading brands such as Heineken, credit reference agency Moody’s and Mastercard.
Unlike many rival global funds, Global Equity Endurance does not have exposure to many of the technology companies that have performed so well this year. For example, there are no stakes in Amazon, Apple, Facebook, Microsoft and Chinese internet giant Alibaba.
Most of this reticence over tech companies is a result of concerns over potential violations of antitrust laws – especially in the United States. The one exception is a 5.9 per cent stake in US tech company Alphabet (Google).
Global Equity Endurance does not have exposure to many of the technology companies that have performed this year
‘Google is the gateway to the internet,’ says Parkinson. ‘It has survived the shift from the desktop computer to the mobile phone and it provides the consumer with vast value. It’s entrenched itself in our daily lives.
‘When I look at the outlook for the company, I see more positive than negative outcomes. I also believe that it has insulated itself from regulatory intervention.’
While the portfolio is skewed towards the United States, Parkinson says this is more coincidence than overwhelming confidence in the world’s largest economy.
‘We’re looking to invest in companies that are growing their earnings,’ he explains.
‘That often results in selecting businesses that are generating profits not just in their home market, but from operations elsewhere in the world such as in emerging economies. Many of these multi-national companies – the likes of Equifax, Mastercard and Visa – just happen to be listed in the United States.’
The fund’s portfolio is little changed from this time last year. But Parkinson and Niven did use the sharp stock market falls in March this year to buy stakes in US companies Hilton Hotels and Darden Restaurants – not on the basis of durable earnings, but because their shares represented outstanding value for money. Both holdings, bar a small stake in Darden, have since been disposed of at a profit.
The fund’s charges are reasonable at 0.87 per cent a year and the stock market identification code is BYXHPJ9. With an annual income of 0.6 per cent, the fund is not suitable for income investors.