After 12 months working for Her Majesty’s Government, he moved first to Cazenove Capital before finding the discipline that would become his specialism, US equities.
“I started in fund management at Singer & Friedlander in London, where I managed its North American fund,” Rowsell says.
Having spent eight years at the firm, an opportunity arose to relocate to the country that had become his focus. “The next step I took was to join Standard Life Investments’ US team in Boston.”
Rowsell spent five years stockpicking there before a new fund launch lured him back to the UK. “In early 2012, I had the opportunity to launch and co-manage the Standard Life Global Smaller Companies Fund alongside Harry Nimmo.”
Nimmo had been successful with his UK small-cap fund and his logical next step was to launch a global small-cap fund. Nimmo invited Rowsell to join him to cover the accounts. That was around four years ago.
“I was brought on board as the US accounts for around half of the global small cap benchmark, so the company needed somebody with that knowledge of US small caps to work on the new fund,” he says
“I manage the fund on a day-to-day basis and cherry-pick the best ideas from Harry with respect to UK equities and Andrew Paisley for European stocks.”
Smaller companies are by their nature higher risk and more volatile than large ones, and Rowsell works to a clear set of principles to minimise this risk – something which he says has been key to his recent outperformance.
“The higher risk and volatility is largely due to the lower quality end of the asset class, so our process focuses on targeting the quality end. We also look for companies we believe will grow their sales and earnings over the long term. Third, we look for companies that are demonstrating momentum in their share price,” he explains.
“When we talk about quality, we are looking for sustainable high returns on capital. This typically means they have a competitive advantage over peers and there are barriers to entry in the industry.
Winning stocks
“We also look for companies that can fund themselves through cashflow, so carry little debt on the balance sheet. This means they will usually be able to return cash to shareholders through buybacks or paying good dividends.”
“In terms of growth we believe it is important they have a track record of growing earnings and they have a business model geared towards earnings growth. Momentum is often a dirty word for investors, but I believe it is very important with smaller companies.
