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Why a systematic fundamental analysis is key for Global Equities

As countries around the world plot their way tentatively through the coronavirus pandemic, we ask our Global Equities team: has their investment philosophy changed during the current crisis? And, when the dust settles, will sustainability be of greater importance to investors?

In the third episode of Fundamentals, Aoifinn Devitt, Head of Investment – Ireland, explores our Global Equities team’s unique investment style and asks whether their philosophy has changed during the ongoing coronavirus pandemic.

Systematic fundamental analysis

Our Global Equities team are fundamental investors that use quantitative techniques: they systematically analyse companies to identify those with the most attractive combinations of time-tested fundamentals.

Lewis Grant, Senior Portfolio Manager, describes the team’s approach as “systematic fundamental analysis”.

“It’s systematic in that we automate the approach as much as possible, but it is still a fundamental process that looks to invest in companies and to value those businesses,” he explains. And as Louise Dudley, Portfolio Manager, points out their approach is “tried and tested”, having adopted this style in 2007.

Staying true to our investment philosophy in the coronavirus era

The coronavirus pandemic has changed how we live our lives in the short-term and it is likely to have long-term consequences. However, Grant explains: “Covid-19 has not changed the characteristics of what makes a good business.

“We’ve always cared about the growth trajectory of a company, the sustainability of a business, and the underlying quality of a business. It’s less about adapting your philosophy and more about staying true to that philosophy both in times of stress, as we have now, but also during the preceding bull market.”  

Dudley says the team’s focus on “the longer-term growth story within the equity space” has also proved beneficial – and thanks to their well-established relationships with companies, the team have been able to have “good conversations with companies throughout this period.”

“Stewardship and active ownership is a good way of ensuring that you really understand your underlying investments in the portfolio,” she adds.

Coronavirus crisis: an awakening opportunity?

As governments around the world continue their fight against coronavirus, Grant thinks that there has been “an awakening in society”.

“Many people are now thinking about how companies are demonstrating their commitment to all of their stakeholders, not just their shareholders,” he says. For example, supermarkets are finding ways to provide food to the more vulnerable members of society. At the same time, they are taking measures to protect their staff and their customers – actions which are eating into their margins. However, he believes companies like these will see “rewards for their behaviour”.

For a deep dive into why our Global Equities team marry a systematic approach with a fundamental analysis, tune in to Fundamentals.

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