Leveraging on the opportunities presented – the launch of the New Sturdza Family Fund

In November the Strategic U.S. Momentum and Value Fund posted a total return of +2.51%, outperforming its benchmark by 0.63 percentage points. In terms of contribution, Alibaba was the largest contributor (+0.39%) followed by Becton Dickinson (+0.32%) and Centene (+0.23%).

Fund Commentary
27 Dec 2018

In November the Strategic U.S. Momentum and Value Fund posted a total return of +2.51%, outperforming its benchmark by 0.63 percentage points. In terms of contribution, Alibaba was the largest contributor (+0.39%) followed by Becton Dickinson (+0.32%) and Centene (+0.23%).

On the other end of the spectrum, the largest detractor was Apple (-0.45%), followed by Wirecard (-0.31%) and Facebook (-0.16%).

In light of the ever-evolving economic landscape, the Investment Adviser is pleased to announce that the active decision has been taken to close the Strategic U.S. Momentum and Value Fund in favour of the Sturdza Family Fund, providing investors with the opportunity to invest in high growth and stable companies, whilst at the same time increasing diversity by including additional geographical and financial opportunities. Please find below the rationale behind this decision.

Background and Opportunity

In 2011, based on the observation that a company’s stock price evolution is strongly correlated with its earnings growth rate over time and given the divergence between companies’ valuation and their growth rate at the time, Eric Sturdza identified an opportunity to invest in a select group of US companies, leading to the launch of the Strategic US Momentum Value Fund. This launch allowed investors and the Sturdza family to benefit from a clear investment methodology, with a focus on identifying stable, noncyclical growth companies trading at low multiples, enabling investors to capitalise on the continuous increase in the companies’ profits, whilst at the same time ensuring an attractive risk profile.

Six years later, the Fund fulfilled its mission of being a fruitful investment, on average generating an 8% (net) return on an annual basis. This said as we approach 2019 it has become clear that some of the conditions that have so far prevailed have evolved, and with that other opportunities have emerged, leading to the launch of the Sturdza Family Fund.

The Investment Adviser believes that the opportunities offered by profitable, sustainably growing, well-run companies continue to exist globally, and become especially attractive with rising financial market volatility. Companies, which enjoy financial flexibility, offer true innovation and market-leading products/services tend to be more resilient and can outperform in more challenging times by seizing opportunities and expanding their market share. The team’s investment process looks to identify such companies and invest in those undervalued by the market.

The Investment Adviser overall believes in broadening the investment universe to allow for complementary investments in fixed income instruments to potentially increase the portfolio’s overall resilience, generating value and allowing the team to take better advantage of the opportunities presented during a downturn.

At its core, the new strategy maintains Eric Sturdza’s investment philosophy, focussed on companies offering stable growth within a more diversified universe. The Investment Adviser, therefore, proposes to adapt to the current environment, expanding the investment universe by:

  • Expanding the geographical universe to include global developed markets, which in the recent cycle did not benefit from the same increase in valuations as the US market.
  • A widening of the investment universe to encapsulate fixed income instruments, in order to take advantage of today’s positive real rates in the US, supporting diversification and potentially reducing volatility within the portfolio, whilst aiming to generate additional returns.

The Team

With the new mandate requiring additional expertise, the Fund will be managed by a team of six individuals, under the leadership of Co-Portfolio Managers Eric Sturdza and Constantin Sturdza. Responsibilities will be split within the team between asset classes as follows:

  • Equities and overall portfolio management will be conducted by Eric Sturdza, Constantin Sturdza, and David Haynal.
  • The fixed income segment will be managed by Eric Vanraes and Pascal Perrone.
  • The asset allocation committee will be led by Marc Craquelin, Eric Sturdza, and Constantin Sturdza assisted by Eric Vanraes, Pascal Perrone, and David Haynal. Each team member has extensive experience within their respective field of responsibility.
  • Eric Sturdza has over 40 years of experience in asset management and private banking and is the President of the Sturdza banking group.
  • Constantin Sturdza has been actively managing US equities for the past 5 years.
  • Eric Vanraes has 30 years experience in the management of fixed income portfolios.
  • Marc Craquelin is the former CIO and Member of the Executive Committee of La Financière De l’Echiquier, in charge of the investment team, with EUR 8.5 billion under management, investing in both the equity and fixed income markets. For further information please contact EI Sturdza directly.

The views and statements contained herein are those of the Eric Sturdza Banking Group in their capacity as Investment Advisers to the Fund as of 11/12/18 and are based on internal research and modelling.