Dalrymple and three partners founded Aubrey Capital Management as a global growth specialist three months ago by. Its S&W Aubrey Global Conviction Fund will be managed by Dalrymple along similar lines to his previous fund, the First State’s global opportunities fund. He managed the First State fund since launch in 1999.
The Aubrey fund will aim for income and growth by investing in a concentrated portfolio of 40-50 global growth stocks. It will aim to provide positive returns in all market conditions by taking big positions in sectors or markets that the manager believes has strong franchise and pricing power. Individual companies will need to demonstrate a competitive advantage over other companies in the same market.
Dalrymple says the fund will take a bottom-up approach to stockpicking in relation to developed markets. Examples of stocks from this part of the portfolio include European retailers H&M and Zara. Asian and emerging market stocks, including emerging Europe, will be selected by using a top-down approach. Factors such as economic growth, interest rates and political stability will help the manager drill down to markets such as Malaysia, which is spending more on infrastructure. A bottom-up approach will then be applied to identify individual stocks that will benefit from the macro-economic trends.
The fund is likely to have an overweight position in Asia and emerging markets because Dalrymple and his team believe these markets have the best growth potential. Within developed markets, the portfolio is likely to have a bias towards small and medium-sized companies. This is because companies of this size are likely to be less researched and will have more scope to grow than bigger companies.
This relatively concentrated portfolio could produce attractive returns over the long term and it is likely to appeal to investors who are looking for a product with more freedom than a global fund benchmarked to an index. Dalrymple’s track record at First State could attract some investors to fund but should be prepared for short-term volatility while the companies are growing. There is also the potential risk that some companies may not meet the manager’s estimate of their full potential.