Global

The Global Equity strategy aims to outperform its benchmark, MSCI All Country World Index, by in excess of 3% per annum over a three-year rolling period. It targets strong long term returns by investing in a focused portfolio of high quality global equities on attractive valuation metrics.

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Global Equity Strategy

Our Global Equity philosophy – tried and tested over many years – is that buying attractively valued, high quality companies, with a proven long term track record of generating positive cash flow, produces strong outperformance for long term investors.  The strategy targets strong excess returns by primarily focussing on bottom-up stock selection, but with an awareness of the prevailing macroeconomic conditions.

We start by taking the MSCI ACWI universe of stocks in excess of $1bn in market capitalisation – approximately 6,000 names. We shrink that list to only those with very long term double digit Cash Flow Return on Investment (“CFROI”) – the majority for 15 consecutive years. This derives our high quality universe of approximately 600 stocks.  The team then ranks the 600 stock universe according to metrics of valuation and earnings momentum and uses this as a guide to assess both new and existing holdings.  The final decision on which stocks to buy is driven by fundamental bottom-up analysis. The team refreshes their understanding of the industry in which the company operates. They then assess the company’s competitive advantages, intangible assets, economies of scale, and barriers to entry, for example, all indicators of its likelihood of sustaining high returns.

Our approach is genuinely active. The portfolio typically has an active share in excess of 85% and 30-40 positions.

The following aspects of our investment process provide an edge and set the TT proposition apart from the competition:

  • High hurdle for quality criteria: we look for companies with 15 consecutive years of double-digit CFROI. Such companies tend to have exceptionally strong balance sheets and have proven themselves able to create value at any stage of multiple business cycles.
  • Strong valuation focus: we retain a stringent valuation focus and believe that ‘quality-at-any-price’ is not sustainable. At the portfolio level, we expect to be in line or slightly cheaper than the market from a valuation standpoint.
  • Time-tested approach: Bernie Huepfl and Ben Ridley have been working together for two decades, utilising the same investment philosophy and process. This approach has historically provided effective downside protection in difficult markets whilst participating in strong markets to produce long-term compounding returns.

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