Evenlode branches out from income stable with global equity fund launch

‘The concise investment style should provide a high degree of active share’


Evenlode’s decision to branch out from equity income funds has been hailed as a “natural step” in the boutique’s trajectory.

On Tuesday the firm revealed it would be launching Evenlode Global Equity for UK investors. The fund, which will be co-managed by Chris Elliott and James Knoedler (pictured), will take a bottom-up concentrated approach, holding between 30 and 50 companies in the portfolio over long periods.

The strategy employs the same process and philosophy as the £925m Evenlode Global Income fund, which Elliott works on with lead manager Ben Peters, but is not constrained by having to maintain a level of dividend payments.

Launching on 4 May, it will sit within the IA Global Equity sector and target a diversified universe of high-quality businesses, with a bias toward large cap stocks, across geographies capable of delivering real fee cash flow at attractive rates. The MSCI World Index will serve as its benchmark.

Evenlode said the launch is part of the Oxfordshire firm’s “natural and incremental evolution” as the business expands outside of its UK client base into the institutional space and European markets. The firm has seen assets grow significantly since the launch of Hugh Yarrow’s Evenlode Income fund in 2017, with assets currently sitting at £4.7bn.

Focus on free cash flow should draw investors in

AJ Bell head of active portfolios Ryan Hughes described the launch of a fund without income constraint as a “natural step” for Evenlode “given their investment process focuses more on a total return approach than an explicit high yield”.

“Given the clear investment process with its focus on free cash flow, investors in the new fund will have a very clear idea of the types of companies that will be in the portfolio and I’m sure there will be plenty of interest in the new fund,” Hughes said.

Square Mile head of research John Monaghan said the fund’s emphasis on capital growth paired with Global Income’s philosophy could potentially throw up a new opportunity set for managers Elliott and Knoedler.

“However, this is a sensibly managed firm with a highly capable team of investors, and we don’t anticipate that the new strategy will be a significant departure or distraction from the success of the Income and Global Income funds,” Monaghan added.

Knoedler who joined Evenlode last May to spearhead the global equity fund launch said it will have a “forensic investment approach focused on unearthing competitively advantage businesses that compound free cash flow over time”.

It will also “prioritise the quality of investable companies, with a process which emphasises deep analysis of the idiosyncratic growth drivers and investment risks of each company in our universe and portfolio”.

Concentrated style should provide high degree of active share

Tom Sparke, investment manager at GDIM, said the launch is notable not just because of its experienced management team but also because of the nature of the fund. “The concise investment style should provide a high degree of active share and potential for outperformance too.”

He added: “We know that it will take ESG seriously and this is becoming a prerequisite for new funds.”

In addition to the UK version of the fund Evenlode will also launch an Irish-domiciled mirror fund on 4 May subject to approval by the Central Bank of Ireland. The fund will have EUR and USD share classes.


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