Modern Value Investing
By Neil Carter
It was a clean sweep in 2024!
Havelock London, and the WS Havelock Global Select Fund, were the ‘Most Searched Fund Groups’ and ‘Most Viewed Active Funds’ in every Quarter of 2024.
We believe that we offer a ‘different and useful’ exposure from a market-cap, geographic and company specific perspective, and please don’t hesitate to get in touch if you require more information.
By Neil Carter
We were delighted to see Havelock London claim the Square Mile “most searched for Fund Group”, and the WS Havelock Global Select Fund claim top spot as the “most searched for active fund” for the third quarter in a row.
As a boutique asset manager, it’s very encouraging to see Fund Buyers looking beyond the larger and better known groups, and if you haven’t done so already, please get in touch.
It has been five years since the Havelock Global Select fund launched in August 2018. I will stop short of saying what “uncertain times” they were, as to my reckoning the future always was, is currently, and will continue to be, largely unknowable. With that said, we really have seen a series of very extreme events. A pandemic that caused the world economy to shutdown, a major war in Europe, zero interest rates, negative oil prices, never before seen amounts of central bank money creation, and double-digit inflation (to name but a few).
Our philosophy as long-term investors is not to think we can anticipate these events, or even that we will have much ability to accurately forecast their consequences once they are known. Rather, we wish to own a portfolio of companies that we think will be robust to whatever the future may hold. Our particular focus on “value” means that we look for opportunities where we think a favourable purchase price will provide a “margin of safety” against the unforeseen.
Being a patient, long-term investor allows us to legitimately not get drawn into the vagaries of short-term performance. It is from this vantage point that we move forward steadfast, with our investment philosophy unchanged. What has changed is that we have a stronger and more experienced team, overseeing a level of assets that means our business is profitable.
I am delighted to have welcomed Gregor into the investment team last month, whose existing experience as an analyst has meant that he “hit the ground running”. Together with Matt, who has been working for us for four years, and myself, this means we have three full time investors contributing to the fund. We are supported in this regard by Russ, who is our Head of Operations and Compliance. My co-Director Neil, together with Rushil, then form the client facing part of our team. Neil, and I, also jointly take care of all other matters to ensure that our company runs smoothly.
On behalf of both Neil, and I, I wish to thank our clients for the support they have given us. We are delighted with how the business has progressed since we founded it, and have high expectations for the future, as we see no shortage of interesting investment opportunities. Whilst we cannot make any promises about the performance that we will deliver, we believe that we are operating in an unloved corner of the market, which means that we are doing something genuinely different to most other global funds.
Three years have now passed since Neil and I launched the Havelock Global Select Fund. In this time the fund has returned 29.9% and is ranked in the top quartile of its sector. As a value-orientated global fund it has outperformed the MSCI World Value index* by 12.4% and outperformed the largest UK listed MSCI World Value ETF** by 21.4%. It has achieved this without investing in any of the large tech companies that have dominated the performance of many market indices and funds, and despite having never been fully invested in equity securities.
We founded Havelock in the belief that a long-term objective focus on a small number of well understood businesses was an increasingly rare investment approach and so offered an advantage. Despite this, even I could not have predicted seeing such folly as investors clamouring to buy shares in a bankrupt company or being induced to invest in a cinema chain with an offer of free popcorn!
Although the last three years has seen several “bumps in the road”, financial markets have been kind to investors. The rising prices of almost all assets have left many either consciously, or sub-consciously, believing that markets only ever go up, with the importance of exercising judgement looking like a quaint relic of the past. History suggests that such complacency is dangerous.
I remain resolute that patiently studying companies, trying to be objective and having a healthy disregard for share price movements increases the chances of superior investment results – even more so if we see an environment where markets are more discriminating. In the long run, better than average performance cannot come from average behaviour, and right now, our approach feels like a road less well travelled.
A further key aspect of our philosophy is the importance of having skin-in-the-game, and to this end most of my own wealth is invested in the fund on the same terms as every other client. If the current euphoric market environment subsides, I suspect that this will look increasingly appealing since all too often the interests of those entrusted with other people’s money are aligned with the gains but not the losses.
I believe that our approach has been validated by the strength of our track-record. The three-year anniversary serves as a widely recognised milestone in the life of a fund, and one that we are now only too happy to be judged against.
Alongside the third anniversary of the fund, I am celebrating my own 21st anniversary of working in the investment management industry. Despite this I did not anticipate just how big a challenge we had set ourselves and it is against this backdrop that I am deeply proud of what we have achieved.
We have been fortunate to have had many supporters along our way and I would like to finish by thanking our staff, clients, friends, and family for all that you have done. The experience of the last three years has taught me to value these relationships even more and I look forward to continuing to find ways to repay the displays of belief that you have shown us.
Matthew Beddall
CEO Havelock London
*The MSCI World Value index net total return expressed in British Pounds.
**The iShares MSCI World Value Factor ETF which tracks the “enhanced” MSCI World Value index.
INVESTMENT RISKS
The value of investments in LF Havelock Global Select (the fund) may fall as well as rise. Investors may not get back the amount they originally invested. Investments will also be affected by currency fluctuations if made from a currency other than the fund’s base currency. Past performance is not a reliable indicator of future results. Potential investors should not use this document as the basis of an investment decision. Decisions to invest in the fund should be informed only by the fund’s Key Investor Information Document (KIID) and prospectus. Potential investors should carefully consider the risks described in those documents and, if required, consult a financial adviser before deciding to invest. The fund can invest more than 35% of its value in securities issued or guaranteed by an EEA state listed in the prospectus.
IMPORTANT INFORMATION
This document has been issued by Havelock London Ltd, which is authorised and regulated by the Financial Conduct Authority (FCA reference number: 799920). It is confidential and must not be distributed or copied – either in whole or in part – without our consent. This material is provided for information only and is not intended to offer, solicit, recommend or advise on the purchase or sale of any investment. It should not be used to make investment decisions. This material is not intended for any person in the United States. None of Havelock London’s services or related funds is registered under the US Investment Company Act of 1940 or the US Securities Act of 1933. This material is not an offer to sell or solicitation of offers to buy securities or investment services to or from any US person. The data for the LF Havelock Global Select Fund was sourced from the fund accountants. The data used for the MSCI Global Value Index and iShares MSCI World Value ETF was sourced from Bloomberg. The data used to judge the funds ranking in the IA Flexible Investment Sector was sourced from FE Trustnet.
We are delighted to announce that the LF Havelock Global Select Fund has been awarded a ‘Positive Prospect’ rating by Square Mile Investment Consulting & Research Limited.
In their summary, the Square Mile Research Team said:
‘This rating highlights the fund’s potential of becoming a major competitive proposition. The fund’s manager, Matthew Beddall, has a lengthy career of investing in global equities having previously worked at Winton for 17 years. The fund launched in August 2018 and has so far delivered a positive track record to its investors. We believe the fund is likely to appeal to investors who want exposure to a concentrated global value portfolio where the manager applies flexible allocation to limit the funds risk, thus leading to long-term outperformance.’
Thank you to the Square Mile Research Team for the time and effort they invested in getting to know Havelock London and our fund.