LF Canlife
UK Equity Fund

The LF Canlife UK Equity Fund aims to generate attractive long-term returns by investing in the shares of UK companies of varying sizes that offer compelling growth opportunities

REASONS TO RECOMMEND

HIGH-CONVICTION, STOCK-PICKING APPROACH
As a concentrated portfolio of around 35-50 companies, the management team invests only in firms where they have high conviction. Decisions are based primarily on a bottom-up stock-picking process that is complemented by a view of economic and market conditions.

SECULAR GROWTH BIAS
A key driving force in the fund is the management team’s search for companies that are able to achieve fundamental structural growth in the belief that this will lead to above-average investment returns.

FOCUS ON HIGHLY LIQUID LARGE AND MID-CAP STOCKS
The fund holds company shares from across the market capitalisation spectrum, with a heavier weighting towards highly liquid mid-cap stocks than the benchmark. The managers target companies with reasonable valuations that are positioned to deliver attractive medium-term growth.

ACTIVE MANAGEMENT TARGETING CONSISTENT LONG-TERM OUTPERFORMANCE
Our managers believe that making active portfolio management decisions is the best way to deliver performance over the long term. Each time they invest, they do so with long-term performance in mind and an understanding of the value that this can provide to investors.

FUND PERFORMANCE

Past performance is not a guide to future performance. The value of investments may fall as well as rise and investors may not get back the amount invested. Income from investments may fluctuate. Performance figures are on a bid to bid with net income reinvested basis. Valuations are based on the previous day's prices. Due to the underlying assets held, the price of the fund is classed as having above average to high volatility.

HOW THE FUND IS MANAGED

The managers of the LF Canlife UK Equity Fund use a high-conviction, bottom-up stock selection process complemented by a top down tactical overlay in their pursuit of long-term capital growth. The fund has been designed to be flexible in order to cater for a wide range of market conditions and consists of two divisions, with 80% dedicated to fundamental and structural positions that make up the core and approximately 20% targeting shorter-term tactical positions.

At the centre of the management team’s investment philosophy is the belief that there are two broad forms of growth available in equity markets: one where the entire market moves forward in a particular direction and one where a single company is able to increase market share by having an advantage over competitors. Structural growth can come from a variety of sources: a marketplace or industry that is growing quickly as a result of specific changes to dynamics, legislation or regulation; or it can be a company that is growing market share through factors such as innovations or barriers to entry.

PORTFOLIO CONSTRUCTION

When it comes to identifying investment opportunities and selecting individual holdings for the fund, the managers follow a well-defined process and are constantly developing a view of the macroeconomic environment as well as current market conditions. These views, in addition to the identification of the themes, trends and sectors that are determined to offer compelling opportunities, are major drivers of investment ideas and stock selection within the portfolio.

  • Target number of positions: 35-50
  • Target active position up to 5%

FUNDAMENTAL ANALYSIS

Once the management team has found the opportunities and sectors that they find attractive, they then seek out the best companies for investment. Specific holdings selected for investment are determined through fundamental research that is undertaken as a group by the four-strong Canada Life Investments UK equities team, with each manager providing input into stock selection decisions. The team also seeks input from the wider Canada Life Investments equity and fixed income teams on matters of global macro and market trends.

The team identifies buys and sells by assessing:

  • Earnings rising ahead of the FTSE All Share Index Average
  • Future return on capital priced below historically achieved levels
  • Above-average free cash flow yields
  • Attractive (not too high) dividend yields which are growing
  • Always aware of value traps, which can appear cheap but are often cheap for good reason

TACTICAL OVERLAY AND MACRO FACTORS

In addition to the core portfolio, the management team also recognises that they can add value through shorter-term opportunities that develop at various points throughout the market cycle. These can be based on thematic and/or global macro trends, and can also take on fundamental structural growth characteristics as well as shorter-term issues.

The management team is highly aware of the influence of macroeconomic themes on the portfolio. While the fund has a bottom-up growth bias, it is not immune to global macro events and therefore the managers use this as an additional factor that can increase or decrease their conviction in a particular area.

Factors in overlay:

  • Style rotations (Growth vs Value; Cyclical vs Non-Cyclical)
  • Economic growth prospects
  • Global demographics
  • Geopolitical and regulatory effects

SHARE CLASS INFORMATION

Share
Class
ISIN SEDOL ONGOING
CHARGE
FIGURE(OCF)
ANNUAL
MANAGEMENT
CHARGE(AMC)
MINIMUM
INITAL
INVESTMENT*
MINIMUM
TOP UP*
C Acc GB00B9J7KW65 B9J7KW6 0.80% 0.75% £100,000 £100
B Acc GB00B9J7Y574 B9J7Y57 1.05% 1.00% £500 £100

FUND MANAGERS

Interested in this fund and would like to find out more?

Contact our team who will be happy to answer any questions you may have about this fund.

Tel Icon +44 (0)20 7415 6490

Email Icon contactclinvestments@canadalife.co.uk

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