Increased demand from financial intermediaries, including U.K. and European wealth managers, for disciplined U.S. value investing has led to a surge of inflows into the BA Beutel Goodman U.S. Value Fund since its launch on 30 November 2020.
Year-to-date inflows have exceeded $480 million, pushing assets through the $500 million milestone since launch.
The fund is a Dublin-UCITS product, which is sub-advised by Beutel, Goodman & Company, a Canadian fund manager specialising in value investing. It mirrors the Beutel Goodman U.S. Equity Strategy, which has built a long-term track record. Over the past 10 years the composite of that strategy has returned 14.46 percent per year (annualised) to investors, compared with a total return of 11.61 percent per year for the Russell 1000 Value Index.
Particularly strong interest is coming from wealth managers, family offices and platforms in the U.K., Germany, Switzerland, the Netherlands and Singapore, according to Brown Advisory, an independent and privately held global investment management firm, which oversees more than $127 billion in client assets.
The fund utilises a differentiated approach, investing in high-quality value companies, unlike many value fund peers that invest in either deeply depressed, cyclical companies, or hold stocks that are closer to ‘core’ equity holdings.
In particular, it seeks to invest in U.S. companies that trade at discounts to their business value, which the manager considers to be the present value of sustainable free cash flow. The fund can appeal to investors who see the attractions of quality stocks, and want to add exposure to value companies in their portfolio.
Its portfolio is fairly concentrated, with typically 25-35 stocks held at any time. Its current largest holdings include Omnicom Group Inc., Harley-Davidson, Inc., Amdocs Limited, Wabtec Corporation, The Kellogg Company and eBay Inc.
Logie Fitzwilliams, head of International Business and global head of Sales at Brown Advisory, said: “We have worked with the Beutel Goodman team for many years and admire their differentiated approach that has enabled them to build an admirable track record. We have been very pleased with the interest in the fund this year as more and more of our clients are looking for a quality U.S. value strategy.”
Rui Cardoso, managing director and portfolio manager US & International Equities at Beutel Goodman, and co-manager of the fund, said: “We emphasise value, but never sacrifice quality. For us, a great franchise is a business that generates high and sustainable free cash flows over a business cycle. Lots of companies can generate high free cash flows over brief periods, so this is where ‘quality’ becomes important. Quality companies can sustain high returns on capital, and therefore high free cash flows, over longer periods of time."
