Our high-conviction stock selection exploits the power of change over the long term.
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Our high-conviction approach results in a portfolio with very different stock weightings to those of the benchmark, generating a consistently high active share.
The European investment team has been managing European equity portfolios for over 10 years.
We look for companies that are repositioning themselves to be exposed to a structural growth theme or undergoing transformational change that will lead to higher future returns.
Time is the last true arbiter of change, and our strong convictions in companies enables us to invest for the long term with a low rate of turnover.
Understanding how unrecognised change is reflected in a company valuation leads to stock selection that is not driven by the traditional labels of “growth” and “value”, and this is reflected in how the fund has performed.
We look for companies that are repositioning themselves to be exposed to a structural growth theme or undergoing transformational change that will lead to higher future returns, which is not yet correctly reflected in analyst forecasts.
Change is systematically under-appreciated by investors. Most stock analysis is linear, but in reality we live in a non-linear world. As a consequence, change can lead to dramatic geometric expansions in stock valuations as changes persist for longer than most investors expect.
We take a bottom-up approach to investing, with stock selection the key driver to returns and the dominant source of relative portfolio risk. Our emphasis is on identifying companies or industries undergoing longer term structural change. Even when a stock decision has a strong thematic element, the fundamental qualities of the company take precedence, and stocks only enter the portfolio on their own merit.
Our high-conviction approach ensures that stocks are only bought when there are clear insights into factors that will generate positive change in the business and which will persist over time. Markets generally value companies in a short-term and linear fashion. We look for companies that can deliver long-term, compounding growth to their shareholders.
James Rutherford
Head of European Equities and Lead Manager - European Alpha
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James Rutherford is Head of European Equities and lead portfolio manager of the European Alpha strategy. He is also co-portfolio manager for the Europe ex-UK, Eurozone, and Sustainable Europe strategies. He joined the international business of Federated Hermes in 2009 as Co-Head of Investment for Hermes Sourcecap, now European Equities at the international business of Federated Hermes.
James began his career at Fidelity as a pan-European research analyst, initially specialising in areas such as property, transportation, autos and media. In 1995 he became a pan-European portfolio manager and co-managed the UK Recovery Trust, which was ranked first in its peer group during that period. James was ultimately responsible for a $19bn portfolio of pan-European institutional funds, and he remained at Fidelity until 2006, when he co-founded Sourcecap with the aim of building a best-in-class investment boutique focused on excellence in European equity management. James graduated from the London School of Economics with a BSc in Theoretical Economics.
Martin Todd
Martin Todd, CFA, Co-Portfolio Manager,
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Martin Todd joined the international business of Federated Hermes in March 2013 as a senior analyst on the European Equities team. Since joining, he has become lead portfolio manager of the Hermes Sustainable Europe strategy, and co-portfolio manager of the Hermes European Alpha Fund, Hermes Europe ex-UK Fund and the Impact Opportunities strategy. Prior to joining, he was an investment director at Scottish Widows Investment Partnership. Martin joined SWIP as a graduate and spent eight years there, primarily investing in UK equities, but also spells covering US and Japanese equity markets. Martin graduated from the University of St Andrews with an MA in Economics & Modern History and is a CFA charterholder. In 2015, Martin featured in Financial News’s ‘40 Under 40 Rising Stars of Asset Management’, an editorial selection of the brightest up-and-coming men and women in the industry.
