The fund aims for growth by investing in a concentrated portfolio of 40 to 60 global equities. It will not be restricted by benchmark weightings, sector constraints or company size.
Stanic and O’Reilly will use a thematic approach to identify companies that may benefit from trends that are likely to influence companies on a global basis. They will avoid areas that may be running in to a headwind. This approach focuses further analysis on a limited number of stocks and reduces the need to spend time on areas of the market the managers feel are uninteresting.
Lead manager Stanic moved to River & Mercantile in June after 10 years at Newton, where he became head of global equities. He started his investment career at Cazenove in 1995.
O’Reilly moved to River & Mercantile from Newton with Stanic. Prior to Newton, he worked at Rio Tinto Pension Investments and F&C.
Stanic ran funds with a thematic approach at Newton and he plans to use a similar strategy at River & Mercantile. Examples of themes include the way emerging markets are affecting global growth, how demand for energy is driving up prices and how companies or governments are reducing debt. The fund will aim to outperform its benchmark, the FTSE All World index, by 3 to 4 per cent a year.
The fund will invest in firms with strong balance sheets and management teams, have a low level of debt, while trading on a valuation that the managers find attractive.
River & Mercantile believes that having a global perspective while being based in the UK enables it to maintain an objective view of where to invest. However, global equity funds from the bigger fund management groups are able to draw on the resources of their investment teams in other regions, which IFAs may see as an advantage when running a global fund.