Mid Wynd International 12 October 2023
Disclosure – Non-Independent Marketing Communication
This is a non-independent marketing communication commissioned by Mid Wynd International. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.
The trust aims to achieve capital and income growth by investing on a worldwide basis.
Mid Wynd International
Lazard Asset Management
Louis Florentin-Lee; Barney Wilson
Association of Investment Companies (AIC) Sector
Dividend Distribution Frequency
Latest Market Capitalisation
Latest Net Gearing (Cum Fair)
Latest Ongoing Charge Ex Perf Fee
(Discount)/ Premium (Cum Fair)
Daily Closing Price
Mid Wynd International (MWY) has long been a constituent of the global peer group. With Simon Edelsten and Alex Illingworth of Artemis at the helm, MWY grew organically and through share issuance from £67m of net assets in May 2014 to £449m on 30/06/2023. Given their success, it perhaps came as a surprise that in February 2023 it was announced that the managers would be leaving Artemis. MWY’s board conducted a review and has now appointed Louis Florentin-Lee and Barney Wilson of Lazard Asset Management, co-managers of the Lazard Global Quality Growth strategy. Louis and Barney have now taken over management of the portfolio, effective on 02/10/2023 with no change to the investment objective.
Fundamentally, the new portfolio is very different, and we discuss in detail the philosophy and investment process in the Portfolio section. Compared to Artemis, the new team have a resolute and more consistent focus on quality. On the other hand, MWY shareholders may recognise some recognisable similarities between the prior team and the current team. Both teams have a differentiated approach to other trusts in the AIC global peer group, both managers are highly active and benchmark agnostic, and they have historically been accessible only to institutional investors.
The Lazard team focus on exploring competitive advantages of businesses, investing only in those that will continue to earn strong returns on capital into the future as a result. At the same time, these companies must be able to reinvest surplus cashflows at attractive rates, such that they compound value for shareholders at a high and attractive rate. The team seek to diversify through making sure that their companies have a wide range of different barriers to entry.
The Lazard team believe that their ability to understand a company’s competitive advantage is the main determinant of their success. As we discuss in the Performance section, their low turnover and highly active approaches have proved very successful historically. Since the Lazard Quality Growth strategy’s inception on 01/02/2011, it has delivered a very strong performance. For example, over the ten years to 30/06/2023, it generated an annualised total return of 13.3% (net of proposed Charges). This is a significant outperformance of the strategy’s benchmark, the MSCI ACWI Index, which generated an annualised return of 10.7% over the same period.
We also compare performance relative to a customised portfolio of similar closed- and open-ended funds over ten years. We find that Lazard has only been beaten by Fundsmith of this peer group. Over five years, against the same peer groups, Lazard comes out top. This strong track record, in our view, justifies the board selecting the new team. However, with the economic environment very different now than over the past decade, it remains to be seen whether the strategy continues to outperform. Compared to the previous set-up, the portfolio is arguably less diversified and has higher conviction, given the singular focus on quality.
We look forward to providing a further update on the specifics of the portfolio now that MWY’s assets have been invested and exploring the managers’ reasoning behind these positions, soon.
- Strong historic track record
- Clearly outlined investment process, with high conviction and highly active approach
- Board has successfully managed the discount during the transition
- New strategy will take time for investors to get accustomed to
- Trust will suffer if quality as a factor underperforms
- Selling pressure from followers of previous managers may persist