EVENLODE GLOBAL EQUITY: Chipping Norton says it is going about its business in a discreet manner

Evenlode is a staff-owned investment firm that makes money for its clients in a discreet way. Based in Chipping Norton, Oxfordshire, its 18-strong investment team manages £5.6bn of assets with the overarching aim of generating “smooth” returns for investors.

Although its £3.3bn income fund has been so popular that it is currently discouraging new investors from joining with a 5 per cent entry charge, Global Equity Income and Global Equity remain open to the public.

Global Equity is the youngest of the three funds and, in absolute terms, has the best investment track record. With £433m to its name, it is nearly four years old and has so far generated an overall return of 54 per cent, compared with a gain of 43 per cent for the average global equity fund.

“Global equities have performed well in a range of economic and market conditions,” said Chris Elliott, co-manager with James Knoedler. “We are particularly pleased with the portfolio’s performance since the inflation shocks of 2021 and beyond. It has performed well, confirming the quality of our stock selection.”

The managers are not interested in making big sector bets or favoring specific stock markets. Their mission is to find profitable companies that generate cash and have a competitive advantage that will last into the future.

“We’re looking for three key ingredients,” Elliott says. “We want to buy companies that have a strong market position, that have a sustainable competitive advantage over their rivals, and that are willing to sacrifice some profits to continue investing in their businesses.”

There are just under 80 companies on its radar, but the fund is currently invested in just 33. Of these, the fund has invested in 20 since launching in July 2020: Mastercard and Alphabet (its two largest holdings), Swiss food giant Nestlé and Spanish software company Amadeus. “For the stocks we like, we set a price at which we are comfortable buying and the price at which we would like to exit,” Knoedler adds. “In this way, we are regularly shuffling money across our opportunity set to generate the best returns for investors without taking on too much risk.”

Recent additions to the portfolio include British exhibition group Informa, shipping broker Clarksons (also listed in the UK) and US online accommodation booking service Airbnb. Among the divestments are US cosmetics giant Estee Lauder and management consultancy Aon, companies whose shares were already uncheap and which faced bleak prospects.

While the fund has exposure to some of the giant US tech companies, artificial intelligence (AI) specialist Nvidia is not among the companies included. “If the price was right, we would buy it,” says Knoedler. “But ideally, we would like to have a longer financial track record for the company before buying its shares. AI has come to the company quite quickly.”

Unlike most other global equity funds, Evenlode Global Equity has a significant portion of its portfolio in UK companies, including RELX, the London Stock Exchange and drinks company Diageo.

“What’s key for us,” says Elliott, “is where our investments generate their income. While UK companies account for 18 percent of the fund’s assets, only 5 percent of the portfolio’s income is derived from the UK. In contrast, while Asia-Pacific stocks account for less than 2 percent of the portfolio, the region accounts for around 17 percent of income.”

The fund’s total charges are reasonable at around 0.85 percent.