Investment Strategies

Regional Equity Strategies

US Equities

We manage the US Small and Mid Cap Equity strategy from JOHCM’s Boston office. The investment philosophy centres on the belief that sector-based investing is the optimal way to identify long term winners, with important advantages in return and risk.

As different factors drive investment success in each sector, the team is able to apply the fund managers’ deep sector expertise to quickly and accurately identify changes in industry dynamics and assess their impact on the stocks they cover. This provides the backdrop for distilling a vast investment universe into a concentrated portfolio of best ideas.

FUND NAME Base Currency 1 year % 3 years % pa 5 years %pa
JOHCM US Small Mid Cap Equity Fund USD 15.29 N/A N/A
Russell 2500 NR $ adj USD 14.64 N/A N/A

The strategy underperformed its benchmark in Financial Year 2016, net of fees, although it has outperformed on a since inception basis, with the mutual fund ranked in the second quartile of its Lipper peer group since its launch on 31 October 2014 (to 30 September 2016).

Stock selection underpins the team’s bottom-up investment process. Positive stock picking was recorded in six out of 11 sectors over the period, most notably in telecommunications, energy and healthcare. As in most markets, the persistently low interest rate structure in the US has led to outperformance from parts of the stock market with bond-like characteristics, such as utilities and real estate. The US SMID team has a preference for genuine growth companies, so has been underweight utilities and real estate, which hurt relative performance over the period.

Despite some investor trepidation ahead of the November 2016 elections, the team maintains a favourable view of US equities. The US economy is gradually improving, as supported by housing and employment data and the team believes rising interest rates are imminent, which will likely have a dramatic impact on the valuations of interest rate-sensitive names. Their sector-based approach is focused on identifying and capitalising on key investment themes, such as the ageing of America, faster-than-expected data growth and a secular shift to natural/organic food consumption.