Threadneedle is now beginning to reap the rewards of the successful restructuring of its US team a year ago as the American Select Growth fund and the American Growth fund are seeing strong performance
It is now just over a year since Threadneedle's US team was restructured. Led by Cormac Weldon (head of US Equities and manager of American Select Growth fund) the team was strengthened by the appointment of Andrew Holliman - who has successfully managed US equities since 1997 - as manager of American Growth fund. Around the same time, Mike Corcell, who has over 10 years' experience in managing both long-only and hedge funds, was also recruited.
This restructuring created a powerful, eight member team which is considered to be one of the largest US teams in the City. One of the major benefits of this is first class access to management teams: for instance, in late 2004, senior management from Citigroup visited London and chose to meet only one UK fund management house face to face - Threadneedle.
Outstanding fund
performance
Since the restructuring, the strong performance the two funds have enjoyed in both the long and short term has been further enhanced. Both funds are now high up in the top quartile of the North American sector and, with such a highly experienced team in place, all should bode well for the future.
Endorsement by Forsyth OBSR and Citywire
Recognition of the strength of Threadneedle's US team, its experience and expertise have recently also come from outside.
l In January 2005, Forsyth OBSR restored the single 'A' ratings of both Threadneedle American Growth fund and its more aggressive sister, Threadneedle American Select Growth fund.
l Over the year to 31 March 2005, Citywire ranked Cormac Weldon and Andrew Holliman 6/53 and 7/53 respectively among fund managers in the IMA North America sector. Source & Copyright: Citywire.
A Tried and Tested Process…
Both funds benefit from the tried and tested Threadneedle investment approach. The US team of eight is complemented by additional input from five other equity desks, 13 global sector groups and a 30-strong bond team. Indeed, the location of the US team within this 'orchestra' of over 130 investment professionals in London facilitates swift and efficient communication of ideas between regional and sector teams. This ensures a genuinely global, 360 degree view of stocks, rather than their just being judged relative to their domestic market or industry group.
Research is at the core of the team's approach with the objective of creating an 'ideas factory' to help build the optimal fund portfolio. To achieve this, the team makes, on average, 900 visits to companies in the US each year - part of the 3,000 meetings conducted each year by Threadneedle. The reputation, size and reach of the team give them unparalleled access to key management teams, information and knowledge. This is central to making informed decisions about companies.
The result has been the very good performance figures of the two US funds over the past year and it places Threadneedle's restructured US team in a good position to excel in the future.
with the strong stamp of individuality
While the knowledge and expertise of the whole US team are reflected in the portfolios, the stamp of the respective fund managers is strongly evident.
Cormac Weldon
Cormac, head of US Equities and manager of Threadneedle American Select Growth fund, has spent 18 years managing US equities. Prior to joining Threadneedle, he worked as a North American analyst at Provident Mutual and as portfolio manager in charge of North American equities at British Gas Pension fund.
Cormac, who is also head of the Global Technology Group at Threadneedle, takes personal responsibility for the final decisions of the components of the core US lists - to ensure they accurately reflect the team's views. He steers the team to develop new ideas and avoids sentiment when deciding to sell stocks he believes are unlikely to add further value to the portfolio.
In an environment in which he believes aggregate earnings growth will be harder to come by than they were last year, he expects companies that deliver genuine growth to be rewarded. Consequently, his strategy remains focused on quality growth stocks, with strong products and proven management teams, that merit re-rating in a climate of slowing profits.
"Our correct call on the US in terms of the top down view on earnings growth and interest rates, combined with correct bottom up analysis undertaken by our newly-strengthened US team, allowed us to avoid blindly following traditional growth areas of the US market which performed poorly throughout 2004. Our funds are well placed to benefit in the more testing environment for equities in 2005 and we are confident we can build on last year's excellent performance in the months to come."
Andrew Holliman
In the 12 months since he assumed management of Threadneedle American Growth fund, Andrew has returned it to outperformance both of the average fund in its sector and of the S&P 500 Index. Under his stewardship, the fund has risen comfortably in performance to the top quartile of its sector.
Andrew, who has successfully managed US equities since 1997, worked as Investment Manager of Baillie Gifford's American fund Oeic between 2000 and 2003. He is very skilled at determining a company's competitive advantages and gauging the duration of barriers to entry upon which a company's growth rate may depend. He also has a talent for screening out market noise when assessing the fundamentals of a company - and this can result in his taking a contrary view on a stock to the market.
Andrew focuses on value-creation potential in businesses. He will only buy stocks he believes are attractively valued. Threadneedle American Growth fund remains positioned towards higher quality, sustainable, above-average growth companies. He believes that, as the profits cycle continues to mature, such companies will clock up superior earnings growth relative to the market which, in turn, should lead to their being re-valued.
Andrew Holliman has a top quartile Citywire Fund Manager Ranking from 31 March 2002 - 31 March 2005 in the North America sector (IMA). Source & Copyright: Citywire.
"I am regularly amazed by the diversity of the individual strengths our team accommodates. On the one hand, we have Mike Corcell, a very experienced US hedge fund manager - his first question will always be about his downside risk on the stock - while I am probably at the other end of the spectrum as a more traditional long-only manager, focused on long-term growth. I believe this confluence of different but complementary perspectives, working in concert, helps generate the investment ideas that are now driving the performance of our retail funds."
