HL SELECT GLOBAL GROWTH SHARES

Why cash is king

Managers' thoughts

Important information - The value of this fund can still fall so you could get back less than you invested, especially over the short term. The information shown is not personal advice and the information about individual companies represents our view as managers of the fund. It is not a personal recommendation to invest in a particular company. If you are at all unsure of the suitability of an investment for your circumstances please contact us for personal advice. The HL Select Funds are managed by our sister company HL Fund Managers Ltd.

Steve Clayton - Fund Manager

6 April 2019

It’s often said that people are companies’ most valuable assets. This is probably true, so long as the firms don’t run out of cash.

Even profitable companies can go out of business, if they can’t afford to pay the bills. So we’ll focus on cash first, profit second, when choosing shares for the new HL Select Global Growth Shares Fund.

Consistent cash generators

The companies we want to own are consistent cash generators. We look for businesses that can fund all their day to day expenses, and still have cash left over.

These businesses have a chance of controlling their own destiny. And with that chance, their people can prove just how valuable they are.

Strong finances are vital, because strong economies are not certain. Good cash generators are far better placed to cope with the inevitable economic downturns. They can also afford to innovate and stay ahead of their rivals.

Funding their own long-term growth

The ability to fund innovation and growth is essential. The more a business can grow over time, the more its shares are likely to be worth. So we search for companies who re-invest back into the business to grow, and serve markets with the potential to deliver stronger demand for many years to come, as consistent growth is powerful.

The pace of growth is critical to future value. If a business grows at 4% per annum, then over a decade it will have grown by 48%. If it can grow at 7% per annum, the increase would be 97% and were it to be truly exceptional and grow at 10% per annum, the increase would be almost 160%.

We’d expect the growth rate of a company to broadly correlate to share price growth over the long run, although, there are no guarantees. The longer the period that growth continues, the more valuable a business can become. So we try to choose shares that we will want to own for years to come, because we believe that owning great businesses for the long haul is the most reliable way to deliver strong returns.

The HL Select difference

As soon as the fund launches, investors will be kept up to date. As we build the portfolio, we’ll let them know exactly which companies we’ve bought, and why.

They’ll also hear from us at least once a month. We’ll tell them what’s going well, and won’t shy away from things that aren’t.

And there’ll be a full portfolio breakdown online, showing every significant holding not just the top 10.

The philosophy is simple – it’s your money, you deserve to know how it’s working for you.

More about HL Select Global Growth Shares including charges

Important - This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research

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