Mid Wynd (MWY) aims to grow real wealth through investing in high-quality stocks across the world. The managers, Simon Edelsten, Alex Illingworth and Rosanna Burcheri, take a long-term perspective, looking to invest in companies which have relatively low business risk (and low leverage), high barriers to entry and strong secular growth - regardless of the short-term economic environment.
They aim to find these companies by first identifying themes which the managers believe have long-term tailwinds. The team then draw up a roadmap for each theme establishing how it is expected to develop over the next few years, and only then research which companies exposed to that theme have the best investment characteristics. The portfolio will normally consist of 8-10 themes, each having an upper limit of 25% of NAV. The themes are compared across a correlation matrix, helping to ensure that the trust is not over exposed to a particular trend. At the time of writing, healthcare costs (17.6%), online services (16.0%) and automation (14.9%) make up the largest themes.
The objective of the trust is to outperform the MSCI AC World Index, and the managers believe this is most easily accomplished by profiting during rising markets, and then protecting capital when markets fall. The aim of protecting capital is a key and consistent aspect of the trust and, according to the managers, since inception the trust has outperformed more in falling markets than in rising markets (67% vs 51%). Since inception the team have a downside capture ratio of 85.5%, and upside capture of 108.6% (source: Artemis, inception to end November 2018).
Since May 2014, the trust has delivered a NAV return of 77.1%, compared to a return of 61.3% and 70% respectively from the MSCI AC World index and the IT Global sector average. As such, the trust sits in the top quartile of the AIC Global peer group for generating alpha (2.63) over that time, and has a Sharpe ratio in the top three of the peer group, a testament to the success of the teams’ risk management processes.
Over the past few years the trust has consistently traded at a premium and this became even more pronounced towards the end of 2018, as investors looked increasingly for a ‘safe haven’. In December, the trust reached a premium as high as 7%, but this has since narrowed and currently the trust is trading on a premium of 3.2%.
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Read the full articleFund History: Mid Wynd International
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