Core portfolio: high dividend yield companies that are at the same time beneficiaries of long term strategic themes and with stable and predictable, albeit, subdued earnings growth. Aiming at total return of 15-20% per annum composed of dividend (4% and above), 5-15% EPS growth, and 1-2% currency appreciation.
Trading portfolio: designed to take advantage of changes in earnings momentum, which is the major driver for stock price momentum, our focus is on fundamental research of earnings growth that has been materially under- or over-estimated by the market. All of our ideas are generated internally although we do use extensive input from analysts from the brokerage industry as well as third parties.
The core portfolio is essentially long positions in stable dividend yield companies. The trading portfolio will focus on stock positions that display positive earnings momentum.
The split between the core and trading portfolio is typically 50:50 however this is a dynamic relationship and will be skewed to either depending on market conditions.
Sell disciplines
We constantly review the portfolio and close positions when our rationale to hold is found to be deficient or wrong. We usually review and take action when the stock is down 10%. We have a hard close limit of 30% although we do not expect hard closure to arise as we intend to deal with the stock before significant loss arises.
Cash Holdings
The fund may have large cash holdings. The managers take a very conservative approach to managing cash balances and deposits will only be made with organisations with a high credit rating. Cash will typically be in USD to avoid exchange rate exposure. Cash holdings will mainly be invested in cash with select banks and money market funds in line with UCITS III diversification rules. The fund is prohibited from long-term cash borrowing.