Presenting the RBC Global Equity Leaders fund
FOR PROFESSIONAL INVESTORS ONLY
In September 2021 RBC BlueBay Asset Management launched the RBC Global Equity Leaders Fund, which is managed using an investment approach dating back over 15 years.
In this Fund in Five we talk to Habib Subjally, head of global equities and senior portfolio manager, to look at the fund from five angles and explore the prospects for global equities going forward.
IMPORTANT INFORMATION
Habib Subjally, head of global equities and senior portfolio manager at RBC Global Asset Management, describes global leaders as being a carefully curated set of large companies that are wealth creating businesses with a market capitalisation in excess of $50bn.
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He says: “The world is always changing, but recently the pace of change has increased. We have an energy crisis, a food crisis, a logistics supply crisis and issues with health care and the cost of living. We need great businesses who are going to be able to adapt, evolve and prosper in this new environment, as well as solve the problems of the world and the global economy.”
According to Subjally, global leaders suit investors who have a long-term investment horizon, but who also value liquidity, namely the ability to get in and out of the asset class.
Adopting a high conviction approach, the RBC Global Equity Leaders Fund invests in between 20–30 global large cap names with the current total being 26.
Describing the investment process as very much a bottom-up, stock picking strategy, Subjally says the active share of the portfolio is about 87%, while the tracking error to its benchmark – the MSCI World Index – is only between 4–5%.
The end result, says Subjally, is an approach that leads to performance that is driven by stock-specific risk that has no persistent correlation to other active return.
“Philosophically we are looking for great businesses at attractive valuations,” he says. “A great business is one that takes different types of capital – financial, human and physical – and multiplies it. Each business in the portfolio has a unique, hard-to-replicate element that gives it a sustainable edge over its competitors.”
According to Subjally, the strategy is differentiated to its peers by its investment process, which focuses on taking an ownership mindset to drive environmental, social and governance (ESG) integration and active engagement, as well as its dedicated, risk-aware portfolio construction process.
“We believe investing is not simply renting a share for a period of time but taking an ownership stake in a business and accepting the responsibility that ownership entails,” he says. “We want to partner with responsible management teams who can operate the business effectively on a day-to-day basis and position it strategically over the long-term.”
While the fund has no specific target, in the knowledge that carbon emissions will be an issue for every business and sector of the market, Subjally says the fund currently has a carbon footprint of about 35% off its benchmark.
* As at 31 May ’22
While the RBC Global Equity Leaders Fund launched in September 2021, the team managing it have been together since 2006.
The 12-strong team today comprises of eight industry specialists, three risk and portfolio construction experts and the team head and founder, Subjally.
“We work together, we collaborate, but we also challenge each other,” he says. “We have a culture of continuous improvement, in which we record every single decision we have made since 2006. For this to be successful, you need a culture of trust, honesty and safety.”
Collectively, the team has over 250 years of investment experience.
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After a strong start, Subjally says the macro-driven environment of the last 12 months has proven challenging for the strategy. However, he notes this is where the fund’s focus on risk management comes into play.
“Right now everyone is concerned about where interest rates, oil prices and exchange rates are going, but no-one is really focused on which company is doing better than others,” he says. “Once this environment dies down, we hope to see significant alpha and outperformance from this portfolio.”
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