The Guinness Global Money Managers Fund gives investors exposure to the growth potential of companies in the asset management sector.The Fund is managed for capital growth and invests in companies engaged in money management services (primarily asset management, but also wealth management, stock exchanges, custodian and trustee services and other specialist service providers).
We believe that, over the long term, asset management companies can grow their earnings faster than the general equity markets. Successful asset management businesses can grow very rapidly, particularly in rising markets. Their risk-return characteristics are especially attractive from a shareholder’s point of view, since they tend to require relatively little capital to grow. Asset management is also a growing global sector: assets under management are rising faster than underlying equity markets.
The Fund is a long-only equity portfolio of around 30 equally-weighted positions. 80% of the Fund is normally invested in companies with a market capitalisation over $500 million.
| Guinness Global Money Managers Fund
BEST FUND OVER 3 YEARS
Equity Sector Banks & Other Financials
In brief: why invest in a fund of asset managers?
- High returns on capital
- Successful asset management companies can grow using relatively little capital. Overall shareholder returns can therefore be very high
- Growing global sector
- Global conventional assets under management are growing faster than world equity returns, supporting growing revenues in the sector
- Low balance sheet risk
- Money management companies tend to have very low gearing versus other financial sectors (especially banks), reducing balance sheet risk
- Above average dividend yield
- The sector typically exhibits high free cashflow, which translates into higher dividend yields on average than the broad equity market
- Higher beta
- The sector has the potential to outperform the market (capture higher beta) during periods of market strength, particularly in equities
Investment case for a portfolio of asset managersAsset managers have a number of characteristics which make them particularly interesting from a shareholders point of view.
- High returns on capital
A key attraction of the money management industry is that successful companies can enjoy both very high rates of return on capital (not much is required) and a growth rate higher than the underlying investment returns as additional assets are raised. Overall shareholder returns can therefore be very high.
- Growing global sector
The value of assets under management globally has grown faster than the performance of equity markets. Since 1990, new investable companies and increasing personal wealth have helped grow conventional assets under management by 700%, versus world equity returns of 150%. We expect this trend to continue. An expanding pool of assets provides an attractive environment for good asset managers to grow.
- Financials exposure with lower balance sheet risk
For investors who are concerned about the fragility of bank balance sheets globally, we believe this Fund gives exposure to the attractive growth and return attributes of the financial sector whilst lessening the balance sheet risk. The average gearing of the underlying companies held in the Fund has been consistently less than zero (i.e. overall net cash).
- Above average dividends
Asset management companies often deliver high free cash flow, which translates into higher dividend yields on average than the broad equity market. The gross dividend yield paid by the companies in our universe of asset managers has been consistently higher than the MSCI World Index gross yield. (You should note that Guinness Global Money Managers Fund is managed for total returns, and has not paid out dividends to investors in the past. There is currently no intention to do so in the future.)
- Higher beta
In periods of rising equity markets, asset management companies focusing on managing equities can enjoy a rising income without adding any new customers. They effectively provide a geared exposure to rising equity markets. So the Fund is a means for investors to capture higher beta during periods of market strength, particularly in equities.
- Potential for rapid growth
A final interesting characteristic is that a successful asset management company can grow its business very rapidly if markets are rising and the underlying performance of its fund range is strong. To date we have had our best successes in the Fund by identifying and investing in this type of company.
- Favourable environment for investing in asset management companies
If you believe that global equity markets are set on a path of reasonable long-term growth, albeit at likely lower returns than of old, and in an environment of rising global invested assets, a diversified portfolio of listed asset managers can play a useful role in your portfolio.
Tim Guinness is the founder and Chief Investment Officer of Guinness Asset Management and Guinness Atkinson Asset Management, our sister US business. He has over 35 years’ investment experience.
He founded Guinness Flight Global Asset Management Ltd in 1987 and was CEO (or joint CEO) from 1987 to 1999 and a portfolio manager of the Global Equity Fund. After Investec acquired Guinness Flight in 1998, he was Chairman of the company during the transition into Investec, as well as lead manager of the Investec Global Energy Fund.
In 2003 he left Investec to set up Guinness Asset Management, which was appointed the outsource manager of Investec Global Energy Fund.
Tim graduated from Cambridge University with a degree in engineering. He then completed a Master’s Degree in Management Science at the Sloan School M.I.T. in the United States.
Tim is co-manager of the Guinness Global Energy Fund and the Guinness Global Money Managers Fund.
Will joined Guinness Asset Management in May 2007, and is co-manager of Guinness Global Energy Fund and the Guinness Global Money Managers Fund.
Prior to joining Guinness, Will was employed by PricewaterhouseCoopers for six years, first in the London Middle Market Assurance Team, then as a valuation specialist in the Valuation & Strategy division. Will qualified as a Chartered Accountant in 2003 and graduated from the University of Cambridge with a Master’s Degree in Geography.
We seek quality asset management companies at the right price.
Identifying high quality asset managersOur process starts with identifying the global investment universe of companies engaged in asset management services. The majority of the universe comprises companies where asset management is the main activity; however, we also look at associated services such as custody banks and stock exchanges. We analyse the universe regularly for companies which look attractive on valuation, return on investment, earnings sentiment and price momentum. In plain English – good companies that are attractively valued where investor sentiment is improving and investor buying is occurring. For the asset managers, we add an important fifth criteria: superior underlying asset management performance. This process is designed to give us a portfolio of reasonable value, good quality, successful asset management companies which we hope will provide a shareholder return in excess of the broad equity market.
Stock due diligenceStock ideas are taken from our screens. We then conduct due diligence to establish whether we have conviction to include the stock in our portfolio. The due diligence centres around detailed financial modelling.
Equally-weighted portfolioThe portfolio comprises 30 equally-weighted positions. Our equally-weighted portfolio construction is designed to create the best balance between maintaining fund concentration and managing stock-specific risk. It also imposes a structural sell discipline: an existing position must be sold to purchase a new holding.
Sector weightsThere is no benchmark adherence in the Fund’s sub-sector weights.
Portfolio risk controls
Stock specific riskBy constructing the fund of 30 equally weighted positions, we avoid significant exposure to any one individual stock.
Emerging market exposureEmerging market exposure is normally limited to 20% of the portfolio.
LiquidityThe portfolio is liquid, with 80% of the Fund normally invested in companies with a market capitalisation over US $500 million.
CurrencyThe Fund is not hedged from a currency perspective.
|Fund||Global Money Managers Fund||Date (period end)||30.06.2014|
|Index||MSCI World Index||Fund Launch||31.12.2010|
|Financials Index||MSCI World Financials Index||Basis||Total return, in GBP|
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.
|Cumulative performance (%)|
|X class (1) (AMC: 0.75%)||Year-to-date||1 year||3 years||5 years||From launch|
|Annualised performance (%)|
|X class (1) (AMC: 0.75%)||1 year||3 years||5 years||10 years||From launch|
|Calendar year performance (%)|
|X class (1) (AMC: 0.75%)||2009||2010||2011||2012||2013|
|Discrete year performance to date (%)|
|12 months ending:||Jun-10||Jun-11||Jun-12||Jun-13||Jun-14|
|Fund X Class (AMC: 0.75%) (1)||-||-||-9.97||47.73||22.56|
|Fund C Class (AMC: 1.5%)||-||-||-10.66||46.63||21.64|
Notes(1) The performance numbers displayed here are calculated in GBP (Sterling). Please note: The Fund's X class was launched on 15/02/2012. The performance shown is a simulation for X class performance being based on the actual performance of the Fund's E class, which has the same annual management charge as the X class, and has existed since the Fund's launch. The Fund's E class is denominated in USD but for the purposes of this performance data its performance is calculated in GBP. Hence, the Fund's E Share class is used here to illustrate the performance of a GBP-based clean-fee (RDR-compliant) share class since the Fund's launch on 31.12.10.
Latest Guinness Global Money Managers Report
Investing in asset managers
Will Riley researches the performance of asset manager equities over the last 20 years, in particular their power to deliver high beta returns and how consistently they outperform.
Asset managers and their dividends
Investment Analyst Mark Hammonds discusses asset managers’ high free cash flow and healthy dividend prospects
The Daily Telegraph | Apr '14
Should you buy shares in your fund manager?
Fund managers and brokers are often highly profitable. The Telegraph’s Richard Dyson asks if you should buy their shares rather than their funds?
Investment Week | Feb '14
Will Riley explains the risks and rewards of investing in asset managers
What investment | Apr '13
Invest in or behind your favourite funds?
What Investment’s Rob St George says this fund “invests solely in the titular Money Managers, with exceptional results.”
|For information on the Fund’s current investments, please see the latest fact sheet:||English||French||German||Italian|
|Will Riley (31/12/2010)
Tim Guinness (31/12/2010)
|Benchmark||MSCI World Index|
|IMA sector||IMA Global|
|Redemption fee||2% within 30 days of purchase|
|Underlying currency||US Dollar|
|Valuation||2300 Dublin time|
|Deal cut off time||1500 Dublin time|
|Year end||31 December|
|Administrator||Capita Financial Administrators (Ireland) Ltd|
|Custodian||JP Morgan Bank (Ireland) plc|
|UK Reporting Fund status||Yes|
|0.75% AMC||1% AMC||1.5% AMC|
|Accumulation or Distribution||Acc||Acc||Acc||Acc||Acc||Acc||Acc|
|Name||E||X||A||D||B||C||C EUR Acc|
|Annual management charge||0.75%||0.75%||1.00%||1.00%||1.50%||1.50%||1.50%|
(Total ongoing charges p.a.)
|Minimum direct investment||$10,000,000||£5,000,000||$200,000||€ 100,000||$1,000||£1,000||€ 1,000|
|Minimum platform investment||Guinness Asset Management minimums do not apply. Platforms apply their own minimum investment levels.|
|Bloomberg ticker||GUGLMME ID||GUGLMMX ID||GUGLMMA ID||GUGLMMD ID||GUGLMMB ID||GUGLMMC ID||GUGLMCE ID|
|Country registrations||UK, CH, LUX, FIN, SGP|
- United Kingdom
- Singapore (professional only)