We permit the publication of our auditors’ report, provided the report is published in full only and is accompanied by the full financial statements to which our auditors’ report relates, and is only published on an access-controlled page on your website, to enable users to verify that an auditors’ report by independent accountants has been commissioned by the directors and issued. Such permission to publish is given by us without accepting or assuming any responsibility or liability to any third party users save where we have agreed terms with them in writing.

Our consent is given on condition that before any third party accesses our auditors’ report via the webpage they first document their agreement to the following terms of access to our report via a click-through webpage with an 'I accept' button. The terms to be included on your website are as follows:

I accept and agree for and on behalf of myself and the Trust I represent (each a "recipient") that:

  1. PricewaterhouseCoopers LLP (“PwC”) accepts no liability (including liability for negligence) to each recipient in relation to PwC’s report. The report is provided to each recipient for information purposes only. If a recipient relies on PwC’s report, it does so entirely at its own risk;
  2. No recipient will bring a claim against PwC which relates to the access to the report by a recipient;
  3. Neither PwC’s report, nor information obtained from it, may be made available to anyone else without PwC’s prior written consent, except where required by law or regulation; and
  4. PwC’s report was prepared with Hermes Property Unit Trust's interests in mind. It was not prepared with any recipient's interests in mind or for its use. PwC’s report is not a substitute for any enquiries that a recipient should make. The financial statements are as at 25 March 2017, and thus PwC’s auditors’ report is based on historical information. Any projection of such information or PwC’s opinion thereon to future periods is subject to the risk that changes may occur after the reports are issued and the description of controls may no longer accurately portray the system of internal control. For these reasons, such projection of information to future periods would be inappropriate.
  5. PwC will be entitled to the benefit of and to enforce these terms.
I accept

1. Select your country

  • United Kingdom
  • Austria
  • Australia
  • Belgium
  • Denmark
  • Finland
  • France
  • Germany
  • Iceland
  • Ireland
  • Italy
  • Luxembourg
  • Netherlands
  • Norway
  • Singapore
  • Spain
  • Sweden
  • Switzerland
  • USA
  • Other

2. Select your investor type

  • Financial Advisor
  • Discretionary Investment Manager
  • Wealth Manager
  • Family Office
  • Institutional Investor
  • Investment Consultant
  • Charity, Foundation & Endowment Investor
  • Retail Investor
  • Press
  • None of the above

3. Accept our terms and conditions

By clicking Proceed I confirm I have read the important information and agree to the terms of use.


The Hermes Investment Management website uses cookies to remember your preferences and help us improve the site.
By proceeding, you agree to cookies being placed on your computer.
Read our privacy and cookie policy.

US All Cap runs on the board, one year since launch

Home / Press Centre / US All Cap runs on the board, one year since launch

15 August 2016
US Equities

As the Hermes US All Cap Fund marks its first anniversary, our fundamental stock selection process has delivered 3.6% outperformance since launch1. Michael Russell, Portfolio Manager, Hermes Investment Management, discusses how we have combined our successful approach to small- and mid-cap investing with experience in the large-cap market to invest in quality companies with durable competitive advantages at a discount to their intrinsic value.

Hermes US All Cap performance over three-month periods, 1 June 2015 to 31 May 2016

SMID graph

Source: Hermes as at 31 May 2016. The performance shown is the gross performance in USD. Relative performance is calculated arithmetically. The inception date of the Fund is 29 May 2015.

Brand new ballgame: The Hermes US All Cap Fund aims to deliver excess returns by investing across the market capitalisation spectrum using the bottom-up process already established by the Hermes US SMID strategy, which has achieved one-, three- and five-year-top quartile performance. I draw on 15 years of previous experience managing US large-cap portfolios for institutional investors, combined with the team’s experience investing in US SMID equities, to identify companies that have high profitability, strong cash flows and attractive growth prospects. Linear Technology is a holding that reflects these characteristics. A leading analogue semiconductor company with 50% profit margins, it benefits from the shift to hybrid electric cars, which will require 5-10 times more semiconductor content.

The big league: The Fund is overweight stocks that have a market capitalisation between $10bn and $50bn, at the lower end of the large-cap sector. These are the companies that still have the significant growth potential that we seek in all our positions plus the advantage of scale. For example, Martin Marietta is the second-largest aggregates producer in the US and would benefit directly from any infrastructure stimulus spent on repairing the nation’s highways.

Conversely, we are underweight mega-cap companies with market capitalisations above $50bn, whose growth prospects are more limited. There are a few notable exceptions to this, like Amazon and Google, in which we hold positions. Amazon’s key markets still have plenty of scope for growth: e-commerce represents only 6% of US retail sales volumes and cloud services account for less than 1% of the global IT market.

Covering base: We leverage our experience of investing in small- and mid-cap stocks and are overweight those with a market capitalisation of between $5bn and $10bn. We intend to hold these smaller cap companies as they grow into successful large caps. More than a quarter of the Fund is invested in smaller capitalisation companies. Often these companies have assets that are difficult for competitors to replicate and are valuable to larger cap companies. This was evidenced by the takeover of Airgas, previously one of our holdings, which distributes package gas cylinders, by Air Liquide at a 50% premium to its closing price.

Heavy hitter: Our focus on company fundamentals has been reflected in our returns, with stock selection contributing 4.2% to our overall outperformance of 3.6% in the Fund’s first year. Since its May 2015 inception, the Fund has now returned 3.2% against the -0.4% loss by the Russell 3000 Total Return index2. Throughout this period, the Fund had a ex-ante beta roughly in line with the benchmark, showing that our investment process has offered excess returns without excess volatility.

Home run: In the Hermes US All Cap Fund’s first year, our established small- and mid-cap investment process has been successfully deployed in an expanded investment universe to produce substantial outperformance. With the US market exposed to immediate risks, including the outcome of the presidential election and the uncertainty surrounding the Federal Reserve’s policy, we will continue to use our fundamentals-driven process to look for new holdings. These companies are likely to be less dependent on economic growth but instead have long-term, structural opportunities to deliver resilient top-line growth.

Any opinions expressed may change. The value of investments and income from them may go down as well as up, and you may not get back the original amount invested. Any investments overseas may be affected by currency exchange rates. Past performance is not a reliable indicator of future results and targets are not guaranteed. All figures, unless otherwise indicated, are sourced from Hermes.

  1. 1 Source: Hermes as at 31 May 2016. The performance shown is the gross performance in USD. Relative performance is calculated arithmetically. The inception date of the fund is 29 May 2015.
  2. 2 Source: Hermes as at 31 May 2016. The performance shown is the gross performance in USD. Relative performance is calculated arithmetically. The inception date of the fund is 29 May 2015.
Share this post:

Find posts by author

  • Alex Knox, ACA
  • Andrew Jackson
  • Andrew Parry
  • Claire Gavini
  • Dr Michael Viehs
  • Emeric Chenebaux
  • Eoin Murray
  • Geoffrey Wan, CFA
  • Harriet Steel
  • Ilana Elbim
  • Jonathan Pines, CFA
  • Joseph Buckley
  • Louise Dudley
  • Mark Sherlock, CFA
  • Martin Todd
  • Michael Russell, CFA
  • Michael Vaughan
  • Neil Williams
  • Nick Spooner
  • Nina Röhrbein
  • Peter Hofbauer
  • Philip Nell
  • Saker Nusseibeh
  • Silvia Dall’Angelo
  • Tatiana Bosteels
  • Tim Crockford
  • Tommaso Mancuso
  • Yasmin Chowdhury

Find posts by category

  • us equities

Press contacts