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Investing in global brands pays dividends for Stonehage Fleming’s flagship fund

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Proven management teams, visible cash flows and high sustainable dividend growth are the best indicators for quality businesses with potential for superior returns, according to Gerrit Smit, manager of the Stonehage Fleming Global Best Ideas Equity Fund.

The fund, which marked its third anniversary in August, seeks to achieve long term growth by investing in best-of-breed global businesses for their quality, strategic competitive edge and value. 
 
The GBP367.5 million fund has returned 67.2 per cent over three years compared to the Equity-International sector average of 39.4 per cent. This performance places the fund 7th (top decile) out of 400 funds in the peer group over the same period. In the same three period the MSCI AC TR Index returned 48.9 per cent.
 
The fund was launched on 16 August 2013.
 
Smit credits the fund’s outperformance to the high conviction strategy and the fundamental research that informs stock selection. Out of 120 core-universe quality businesses that are constantly monitored by the Stonehage Fleming research team, Smit holds 25 in the portfolio. In selecting these companies he focuses on the quality of management, balance sheet, return on capital, cash flow and ability to grow dividends each year.
 
It is a strategy that Smit has used to manage discrete portfolios for Stonehage Fleming’s ultra-high net worth clients for over nine years, which has seen total assets under the management of his team grow to over GBP1.4 billion.
 
In January the company announced a distribution partnership with Gemini Investment Management and granted broader access to the Global Best Ideas Equity Fund which had previously been exclusive to clients of Stonehage Fleming.
 
Smit says: “A good business remains a good business irrespective of what happens to the share price in the short term. High conviction in quality companies will provide investors with long-term sustainable returns and enable them to ride out short term market volatility.
 
“Two significant catalysts we have on our radar are the ongoing impact of Brexit and the volatility we anticipate around the divisive US presidential elections. But neither are a cause of permanent concern. Strong global companies operating across a spread of international markets are generally not overexposed to one region or currency. If anything, change and uncertainty generates opportunity.
 
“It is important not to get complacent over globalisation or believe the hype about it being too late to catch emerging market growth. There is a still huge potential in the emerging consumer markets and good companies, especially from the US, are finding value in the untapped opportunities.”

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