Q: How would you describe the investment philosophy of the fund?

A: This is a fund with long-term investment focus, which is suitable for investors and advisors with long-term investment horizons who want broad diversified exposure to global stocks. We’re perhaps more long-term than the average fund on the market. We like to keep the turnover low as we base our decisions on rigorous analysis of the companies and then we’re not too worried about the volatility in quarterly earnings.

The fund is set up with about 75 holdings at any given time. It is geographically diverse across the globe and we tend to be relatively sector neutral. We look at ideas on a country basis, decide where to be overweight or underweight, and then we look at stock ideas. Because of our long-term approach, we don’t jump in and out of stocks based on current trends or news of the day.

As a company, we have about 11 billion pounds under management across assets, including general insurance assets, life assets, pension funds, and unitlinked funds. We have three open-ended investment companies: a U.K. based one, an international one, which is the Global Growth fund, and a fixed interest one.

Q: What is the process that leads to choosing the actual stocks?

A: We first choose the countries that we want to be in. That initial decision is based on our view of global economic trends. On the international desk, we have two fund managers and together we look at the economic trends and decide which countries we want to be in. We decide where we want to be overweight and underweight based on both share prices and currencies as we don’t hedge the currencies.

Once we’ve decided on that, we move on to the area of stock picking and often that takes a thematic approach. For example, recently I was looking at the software sector. On a global basis, we looked at leading software companies, and we came up with a few different ideas. The global perspective of the fund helps out because we can choose any company, regardless of the country where it is domiciled.

Once we’ve come up with the theme or the idea, we go on to the numbers and the valuation. Because of our long-term approach, when we’ve got an idea, we’d wait for the valuations to be appropriate. We’ll just put it on the radar screen and it might take a year before we actually buy it. We like to go in when the stock is a little bit out of favor, so we’re a bit contrarian in that sense.

Q: What is your concept of the globe or world? How many countries do you look at?

A: The fund currently has permission to invest in any market in the world but we only invest in developed markets, such as the U.K., continental Europe, U.S., Canada, Australia, Hong Kong and China, but only through Chinese shares listed in the Hong Kong market. We also invest in Singapore, Korea, and Japan, which is one of our overweight regions at the minute.

Q: Global funds are often anchored on one country or region and have satellite holdings around the world. Do you have such a core region?

A: No we don’t have such an anchor. Compared to our peers, we’re probably light in the U.K. as we only have around 7% to 10% invested here. Our top market is the U.S., which accounts for about 35% of the portfolio. The second largest market is Japan with 18% to 20% of the portfolio, and the third one would probably be the U.K. Our biggest single region is Europe but the holdings are spread among different countries.

Q: What is your view on South America or Russia? Do you review those markets?

A: We acknowledge that some markets, given our resources, are a bit more specialist and beyond our range of expertise. So we have global exposure but I would say that we’re at the prudent end of the global universe. If people want to invest directly in Thailand or Taiwan, then I think they will have better opportunities to go elsewhere to do that.

Q: How do you narrow down such a large universe to a manageable list of potential holdings?

A: Some of it is done by screening and some of it is done in a qualitative basis. Given the large universe that we look at, we acknowledge that we’ll undoubtedly miss certain opportunities but we come across other things. Probably twothirds of the companies in the fund, or about 50 holdings, would be large-cap companies that are narrowed down by the screens and qualitative assessment.

In terms of picking the smaller-cap ideas, some of them come from our contacts in various countries. Also, as we manage the funds on a global basis, we have country and market specialists in all of the different regions in which we invest. Sometimes the ideas are generated from them and we’ll assess them afterwards.

At other times we’ll be looking at a particular theme, such as renewable energy, and then look for one of the higher- quality companies in that sector.

Q: What type of quantitative screens do you rely on?

A: If we’re looking for some inexpensive stocks to add to the portfolio, then the initial screenings would include dividend yields and how well dividends are covered. In terms of the growth screens, we don’t particularly believe in discounted cash flow models because they are so open to what growth you put in. We don’t think it’s possible to know the growth rate of a company in 10 years time; it’s a bit too much voodoo for our liking.