• Why invest in the Guinness Global Innovators Fund?
• Fund managers
• How do we run the Fund
• How do we construct the portfolio

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

How do we run the Fund?

Identifying innovative companies

The investment process begins by identifying innovative companies. We assess all sectors to identify trends and themes that are driving growth, disrupting incumbent business models or technology, or significantly improving current products or services. We utilise third party research and analysis to further broaden our understanding of the secular growth trends in the market. Typically, we identify 10-15 themes at any one time and update them annually. We then identify companies with exposure to these secular growth themes which have a market capitalisation greater than $0.5bn.

Quality screen

With the initial universe of innovative companies created we then employ a quality screen to select only those businesses that are “good companies”. We only want to invest in profitable companies, with strong balance sheets, that have good growth prospects and emphasise that our process is intended to find not just innovative companies, but good quality innovative companies. The simple quality criteria screened for are (i) return on capital greater than cost of capital last year (ii) debt/equity < 150%, and (iii) positive earnings growth expected next year. The companies left after the quality screen make up the investible investment universe for the fund and typically have better than average financial metrics showing faster profit growth, larger profit margins, and less susceptibility to cyclical pressures.

Further research and stock selection

From this universe of good quality, innovative companies, we then seek to identify which of them are undervalued. We screen all these 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 to determine whether the returns will persist. We also recognise that sentiment and hype can sometimes drive up the valuations of innovative companies and so we try to maintain a strict value discipline. We want to avoid paying up for high levels of expected growth in the future as we know, on average, very high growth expectations are often not met, and this can have a detrimental effect on a company’s valuation. We therefore look for companies offering good value relative to their sector, to their historic valuations, or 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.

Fonds	Global Innovators Fund	Base	Total return, in GBP
L’indice de référence	MSCI World Index	date (fin de période)	30.06.2018
Sector	IA Global (2)	date de lancement	31.10.2014

Merci de n’oublier pas que les performances passées ne constituent pas une indication des performances futures. La valeur de votre investissement peut évoluer à la hausse comme à la basse et peut être influencée par la fluctuation des devises et les conditions générales des marchés, et il se peut que vous ne récupériez pas votre capital de départ.

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.

la performance cumulative (GBP, %)
La stratégie (rendements de fonds enregistré aux États-Unis)	À ce jour	1 an	3 ans	5 ans	Lancement de la stratégie (01.05.03)
Fonds	2,86	13,91	65,85	120,71	544,06
L’indice	3,24	9,90	54,68	89,70	359,59
Secteur (2)	2,47	9,12	43,99	70,09	282,59

la performance annualisée (GBP, %)
La stratégie (rendements de fonds enregistré aux États-Unis)	1 an	3 ans	5 ans	10 ans	Lancement de la stratégie (01.05.03)
Fonds	13,91	18,35	17,15	15,49	13,06
L’indice	9,90	15,63	13,65	11,33	10,57
Secteur (2)	9,12	12,91	11,20	8,64	9,25

la performance d’année civile (GBP, %)
La stratégie (rendements de fonds enregistré aux États-Unis)	2013	2014	2015	2016	2017
Fonds	42,59	18,86	1,96	27,68	22,00
L’indice	25,00	12,07	5,45	29,01	12,42
Secteur (2)	21,65	7,09	2,77	23,33	14,02

la performance d’année discrete (à ce jour)(GBP, %)
La stratégie (rendements de fonds enregistré aux États-Unis). 12 mois se terminant en:	juin '14	juin '15	juin '16	juin '17	juin '18
Fonds	21,54	9,50	10,13	32,17	13,91
L’indice	10,62	10,86	15,02	22,32	9,90
Secteur (2)	8,96	8,41	6,66	23,71	9,12

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 IMA 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.

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	Link Fund 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 charities	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* (Total ongoing charges p.a.)	1.24%	0.99%	0.74%	1.99%
Minimum direct investment	£/€/$ 10,000	£/€/$ 100,000	£/€/$ 100,000,000	£/€/$ 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	Available in UK, CH, LUX, FIN, SGP, AT, IT, DE

Notes

*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