The Guinness Global Innovators Fund is designed to provide investors with exposure to companies benefiting from innovations in technology, communication, globalisation or innovative management strategies. The Fund is managed for capital growth, and holds a concentrated portfolio of large and medium-sized companies in any industry and in almost any region.

Launched in 2014, the Fund is a UCITS version of our global equity strategy as successfully applied to a mutual fund for US investors since 2003.

We invest in companies we believe can create value through original thinking. There are many forms of innovation, not just disruptive products from scientific and technological advances. We believe innovation is the intelligent application of ideas and can be found in virtually all industries and at different stages in the company lifecycle. Companies in more mature industries can make improvements in existing products to boost sales and customer loyalty; or they can apply smarter management and improved processes for faster and more efficient product delivery.

We believe innovative companies that develop competitive strengths (and maintain good capital discipline) will deliver the key factors behind superior shareholder returns:

  • Higher than average return on investment
  • Persistent growth over a business cycle

We maintain a high conviction portfolio of around 30 equally-weighted stocks, with low turnover and no benchmark-driven constraints on sector or regional weightings.

Why invest in the Guinness Global Innovators Fund?

The Fund is designed to provide investors with exposure to global equities through a high conviction, low turnover portfolio of companies that we believe can create value through original thinking.

We believe innovative companies outperform
Top line growth can come about by shorter time to market, increased sales or successful product launches. Bottom line improvements can come from reduced development or production costs. Innovative companies should achieve a higher return on capital than their peers and therefore outperform the index over a cycle.
High conviction
The Fund typically invests in just 30 companies, with each company having an equal weighting. This provides a good balance between the benefits of diversification while also allowing each company to add meaningfully to performance. We don’t have a long tail of small positions and by definition we can never just ‘hug’ the benchmark index.
Fundamentally driven
We focus on ‘bottom-up’ stock selection rather than trying to make decisions based on an expected outlook for the world economy. We like to invest in innovative companies that have the ability to earn above average return on capital. Sentiment and hype can often drive up valuations of some innovative companies; we maintain a strict value discipline to make sure we don’t overpay for future growth.
Low turnover
We prefer to invest over the long term. We also recognise the increased costs of trading in and out of companies unnecessarily. Typically we will hold a company in the portfolio for between 3 and 4 years.
Repeatable and independent
Ian Mortimer and Matthew Page have managed funds in accordance with this investment process since 2010, and the strategy has been applied since 2003. The process is clear, robust, transparent and scalable. It filters out much of the noise and hype that surrounds companies to focus on the true signals that drive company valuations. By performing their own company research and analysis, using their own proprietary modelling systems, the managers try to avoid some of the behavioural biases associated with being unduly influenced by market sentiment.

Fund managers

Dr Ian Mortimer, CFA

Ian joined Guinness Asset Management in 2006, and is portfolio manager on the Guinness Global Equity Income Fund, Guinness Global Innovators Fund and the Guinness European Equity Income Fund.

Prior to joining Guinness, Ian completed a D.Phil. in experimental physics at Christ Church, University of Oxford, and graduated in 2006. Ian graduated from University College London with a First Class Honours Master’s degree in Physics in 2003. He is a CFA Charterholder.

Matthew Page, CFA

Matthew joined Guinness Asset Management in 2005, and is portfolio manager on the Guinness Global Equity Income Fund, Guinness Global Innovators Fund and the Guinness European Equity Income Fund.

Prior to joining Guinness, Matthew joined Goldman Sachs on the graduate scheme in 2004 working in Foreign Exchange and Fixed Income. Matthew graduated from New College, University of Oxford, with a Master’s Degree in Physics. He is a CFA Charterholder.

How do we run the Fund?

Identifying innovative companies
The key areas of innovation that enable companies to create shareholder value are in scientific and technological advances, superior products and services, and improved business models. Identifying innovative companies is not easy, but we believe they can be split into two distinct classifications dependant on their position in the company lifecycle.

Group 1: Qualitative search for smaller, early stage, more disruptive companies
Innovators - return on capital over time To identify small up and coming companies that have the potential to grow rapidly and earn high return on capital in the future, we analyse journals, magazines and articles to find companies which the authors identify as innovative.

Group 2: Quantitative search for more mature companies using innovation to drive profitable growth
We also seek to identify companies that have adapted to changing circumstances in order to continue to create value for shareholders regardless of the prevailing economic environment or competitive threats. To do this we screen for companies which have achieved consistently high return on capital over an entire business cycle (return on capital over 10% each year for ten years).

We believe these qualitative and quantitative screens enable us to identify a mixture of:
  • early stage disruptive companies
  • more established companies in rapid growth stages
  • well established companies with a strong culture of innovation and continual improvement in their product or service, their processes, or their business model
Further research and stock selection
From this universe of innovative companies, we then seek to identify which of them are a) undervalued, and b) have the potential to reverse that undervaluation in the near future.

We screen all innovative companies to identify which are the most attractive in terms of valuation, return on investment, earnings sentiment, and price momentum. By ranking companies using these four criteria, we can sift through the data to prioritise candidates for extended due diligence, testing and research.

Having identified candidates for further due diligence, we subject all potential investments to detailed fundamental analysis. Above all, we want to understand what competitive advantages or barriers to entry are sustaining a company’s return on investment in order to determine whether the returns will persist.

We then consider value. We are value-biased and we do not like to pay up for uncertain future growth. We like to see companies offering value relative to their sector, to their historic valuations and in absolute terms.

Sell discipline
It is often easier to find companies to buy that look cheap than it is to identify those companies you own which should be sold. We consider sell discipline as important as selecting companies for purchase and continuously monitor the companies we hold in the Fund. The six core reasons we may sell a company are outlined below.
  1. The company no longer qualifies as innovative
  2. Their balance sheet becomes stretched
  3. The valuation becomes too rich, or no longer offers compelling upside
  4. There is a change in a company’s capital budgeting approach
  5. Our original investment thesis no longer holds
  6. We find a more compelling investment idea

How do we construct the portfolio

The Guinness Global Innovators Fund is a concentrated portfolio of around 30 equally weighted stocks. This provides a number of useful attributes:

  1. It reduces stock-specific risk, as we will not be overweight in a small number of favourite companies.
  2. We will not have a long tail of small holdings in the portfolio, which can be a distraction and a potential drag on performance.
  3. It instils a strong sell discipline as we must typically sell a position in order to make way for a new one; and we must constantly assess the companies we own in the portfolio in comparison to the rest of the universe available to us.
  4. We are truly index independent. All companies held are weighted equally without regard to their weighting in the benchmark index, so our portfolio has a high active weight.
Fund Global Innovators Fund Basis Total return, in GBP
Index MSCI World Index Date (period end) 31.07.2017
Sector IMA Global (2) Fund Launch 31.10.2014

Please remember that past performance is not a guide to future performance. The value of an investment and the income from it can fall as well as rise as a result of market and currency movement, and you may not get back the amount originally invested.

The returns stated below are a simulation based on the actual returns of Guinness Atkinson Global Innovators Fund, a mutual fund for US investors. Both funds are managed in accordance with the same investment process and with the same portfolios. See Note 1.

Cumulative performance (GBP, %)
Strategy performance (returns of US mutual fund) Year-to-date 1 year 3 years 5 years Strategy history (01.05.03)
Fund 12.59 26.82 62.86 158.11 477.87
Index 6.57 17.60 57.97 111.85 322.04
Sector (2) 8.69 17.83 44.96 87.52 255.90
Annualised performance (GBP, %)
Strategy performance (returns of US mutual fund) 1 year 3 years 5 years 10 years Strategy history (01.05.03)
Fund 26.82 17.63 20.87 13.03 13.08
Index 17.60 16.45 16.19 9.68 10.62
Sector (2) 17.83 13.16 13.39 7.10 9.31
Calendar year performance (GBP, %)
Strategy performance (returns of US mutual fund) 2012 2013 2014 2015 2016
Fund 14.91 42.59 18.86 1.96 27.68
Index 11.42 25.00 12.07 5.45 29.01
Sector (2) 9.43 21.65 7.09 2.77 23.33
Discrete year performance to date (GBP, %)
Strategy performance (returns of US mutual fund). 12 months ending: Jul-13 Jul-14 Jul-15 Jul-16 Jul-17
Fund 37.71 15.09 8.62 18.18 26.82
Index 28.11 4.69 14.13 17.64 17.60
Sector (2) 23.99 4.33 9.40 12.42 17.83

Source: Financial Express, bid to bid basis, total return, in GBP.

Notes

(1) Simulated past performance. Guinness Global Innovators Fund (Dublin UCITS version) launches on 31.10.14, so no actual performance numbers are available. The investment team has been running the Guinness Atkinson Global Innovators Fund (mutual fund for US investors) in accordance with the same methodology continuously since May 2003 and therefore we believe the performance numbers quoted are a fair reflection of what the performance of this Fund would have been. The past performance of the Guinness Atkinson Global Innovators Fund is not indicative of the future performance of Guinness Global Innovators Fund.

(2) Guinness Atkinson Global Innovators Fund is a mutual fund for US investors and is not included in the IA Global sector. The sector’s average performance is included for a comparison of the Fund with the average performance of global equity funds available in the UK.

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Archive

Insights

Nov '16

Implications of the US election result Ian Mortimer and Matthew Page discuss the consequence of the US election results.

Feb '16

2015 performance & portfolio review Ian Mortimer & Matthew Page discuss how the portfolio performed in 2015

Oct '14

Innovation matters
Ian Mortimer explains the importance of innovation in the success of companies and explores some examples.

Jun '14

Some thoughts on equally-weighted portfolios
Matthew Page explores the reasons behind running a concentrated, equally-weighted portfolio.

Nov '12

To meet or not to meet
Matthew Page discusses the merits of meeting company management

Press

Feb '15

US fund drums up interest over here
Jeff Prestridge of the Financial Mail on Sunday profiles a new fund from Guinness that builds on the success of an identical fund in the US.>

Oct '14

Fund launch: Global Innovators
Guinness launches its top-performing global growth strategy in a fund for UK and European investors

Oct '14

“Best performing global fund in the US” made available to UK investors
Trustnet editor Joshua Ausden highlights the very strong numbers behind Guinness’s new global equity fund.

Fact sheets
For information on the Fund’s current investments, please see the latest fact sheet: English
Key facts
Launch date 31/10/2014
Fund managers (start date) Ian Mortimer (31/10/2014) Matthew Page (31/10/2014)
Benchmark MSCI World Index
IA sector IA Global
Structure OEIC (UCITS)
Domicile Ireland
Redemption fee 2% within 30 days of purchase
 
Underlying currency US Dollar
Pricing Daily, forwards
Valuation 2300 Dublin time
Deal cut off time 1500 Dublin time
Administrator Capita Financial Administrators (Ireland) Ltd
Custodian JP Morgan Bank (Ireland) plc
UK Reporting Fund status Yes
ISA Eligible Yes
Share classes
1.24% OCF 0.99% OCF 0.74% OCF For early investors (1) 1.99% OCF
Currency GBP, EUR, USD GBP, EUR, USD GBP, EUR, USD GBP, EUR, USD
Accumulation or Distribution Acc Acc Acc Acc
Name X Y Z C
Initial charge 0% 0% 0% 5%
OCF (2) (Total ongoing charges p.a.) 1.24% 0.99% 0.74% 1.99%
Minimum direct investment £/€/$ 10,000 £/€/$ 100,000 £/€/$ 100,000,000 (1) £/€/$ 10,000
Minimum platform investment Guinness Asset Management minimums do not apply. Platforms apply their own minimum investment levels.
ISIN GBP IE00BQXX3G48
EUR IE00BQXX3H54
USD IE00BQXX3J78
GBP IE00BQXX3K83
EUR IE00BQXX3L90
USD IE00BQXX3M08
GBP IE00BQXX3N15
EUR IE00BQXX3P39
USD IE00BQXX3Q46
GBP IE00BQXX3C00
EUR IE00BQXX3D17
USD IE00BQXX3F31
SEDOL GBP BQXX3G4
EUR BQXX3H5
USD BQXX3J7
GBP BQXX3K8
EUR BQXX3L9
USD BQXX3M0
GBP BQXX3N1
EUR BQXX3P3
USD BQXX3Q4
GBP BQXX3C0
EUR BQXX3D1
USD BQXX3F3
Bloomberg ticker GBP GGIXGBA ID
EUR GGIXEUA ID
USD GGIXUSA ID
GBP GGIYGBA ID
EUR GGIYEUA ID
USD GGIYUSA ID
GBP GGIZGBA ID
EUR GGIZEUA ID
USD GGIZUSA ID
GBP GGICGBA ID
EUR GGICEUA ID
USD GGICUSA ID
Country registrations UK. Others to follow – contact Guinness Asset Management for more information.

Notes

1. The Z classes' £/€/$ 100 million minimum investment is temporarily waived for a book build offer for early investors in the Fund until the Fund reaches £50 million. This offer is subject to change or withdrawal by Guinness Asset Management at any time without notice.
2. OCF = Ongoing Charges Figure, which includes the annual management charge.

Country codes

UK
United Kingdom
CH
Switzerland
LUX
Luxembourg
FIN
Finland
SGP
Singapore (professional only)
GER
Germany
FR
France