Claremont expands high-conviction equity offering
Claremont Global founder Bob Desmond may well have one of the most interesting CVs among Australia’s leading portfolio managers. Born in Zimbabwe, he cut his teeth in investment markets in both Africa and the UK before settling in Australia and building what is now a $1 billion global equity business.
Formerly the Evans and Partners International Fund, Desmond and fellow portfolio manager Adam Chandler are taking their high-conviction approach to the masses, on the back of “growing external interest” for their core global equity strategy.
The International Fund, renamed the Claremont Global Fund, will follow the same investment philosophy that has seen the team deliver a 15.5% a year return since inception in 2014. That is, they will invest in a portfolio of just 10 to 15 of the highest-quality names they can find, with the likes of Microsoft (NASDAQ: MSFT), Alphabet (NASDAQ: GOOGL) and Nike (NYSE: NKE) among them today.
The strategy offers a juxtaposition against the boom in momentum and index-driven strategies, something Desmond puts down to his team’s focus on quality. For instance, he questions the popularity of the “cyclical rally,” asking why someone would sell a company like Alphabet, which is growing revenue at over 20 per cent and has 90 per cent market share.
Having recently marked the ten-year anniversary of its strategy, the group’s $1 billion in assets under management sets it apart from the growing cohort of equity managers entering the sector as the bull market continued to extend. With the global equity mandates from Evans and Partners set to continue, the Claremont team will be able to focus on investing, rather than seeking new investors.
French for “clear mountain,” the name of Claremont is intended to reflect the absolute transparency offered in the firm’s portfolio and its “business and cultural values.” Both an unhedged and hedged version of the Claremont Global Fund will be launched, having already garnered the approval of research houses Lonsec, Zenith and SQM Research.
Importantly for existing investors, there will be no change to the investment philosophy or process and even the APIR codes will remain the same; it is a change in name only. The core of this approach remains to invest into companies with “durable competitive advantages, resilient earnings, financial strength and seasoned management teams,” or ultimately, “the world’s best businesses.”
“There are large parts of the market where we just won’t go,” says Desmond, citing banks, insurers, commodities, and oil, and any company that is leveraged, in a recent update to investors. Similarly, the firm does not seek to make the big macro calls; “you’ll never hear an investment meeting start with ‘the Fed said this’…it’s just 15 stocks,” says Desmond.