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Artemis US Fund Launches - Phase two

Heather Ferguson | Tue 28 October 2014

Investments can go down as well as up so there is always a danger that you could get back less than you invest. Nothing here is personalised advice, if unsure you should seek advice.

The Artemis US equity team, headed by Cormac Weldon, recently launched three US focused funds. He has now, along with Stephen Moore, launched the fourth and fifth funds in Artemis' new US range. Further information on the team, their process and the three funds already launched, is available in my recent article.

The Artemis US Smaller Companies and Artemis US Absolute Return funds complete the five strong American fund offering.

US Smaller Companies

The fund will focus on higher risk small and medium sized companies within the US. The manager plans on running a fairly concentrated portfolio of 50-70 stocks which allows each stock to make a significant contribution to performance, but is higher risk.

US Absolute Return

The fund aims to achieve a positive return over any three year period. The manager will employ a strategy of investing in shares he believes will rise in value over time (referred to as 'long' investing). Importantly, he will also look to profit from shares he believes will fall in value (referred to as 'shorting'). If the latter strategy proves positive, it could help reduce volatility. However, this is a higher-risk strategy which relies on the fund manager making the right calls. If he gets it wrong he could lose money even in a rising market.

The fund will generally have a net exposure (percentage of long positions minus the percentage of short positions) of 15% and a gross exposure (percentage of long positions plus the percentage of short positions) of 130%.

Key to both long and short stock selection is that a risk is only worth taking if the potential reward significantly exceeds the potential loss. For every unit of downside risk, the team looks for a stock that has at least twice the upside potential. This threshold is not a hard and fast rule, but one the team looks to achieve.

Please also note the US Absolute Return fund carries a performance fee of 20% on any outperformance of the fund's benchmark (S&P 500) on an annual basis. Further details of which can be found in the Key Investor Information Document and fund prospectus.

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Our view on these funds

The US is a difficult sector for a fund manager to add value. Stocks tend to be highly researched, making it difficult for managers to uncover opportunities others have overlooked. Our analysis suggests the US market looks expensive relative to its longer term average, which will make it harder for the managers to identify undervalued stocks. However, as part of a balanced, long term investment strategy, investors may consider some exposure to US stock markets.

At present, these funds will not be added to the Wealth 150 list of our favourite funds across the major sectors, though we will monitor their progress.

Please read the US Smaller Companies key features/key investor information document in addition to the information above.

Please read the US Absolute Return key features/key investor information document in addition to the information above.

The value of investments can go down as well as up, this means you could get back less than you invested. Therefore all investments should be regarded with a long term view. No news or research item is a personal recommendation to deal. If you are unsure about the suitability of an investment please contact us for advice.
Important information - Please remember the value of investments, and any income from them, can fall as well as rise so you could get back less than you invest. This article is provided to help you make your own investment decisions, it is not advice. If you are unsure of the suitability of an investment for your circumstances please seek advice. No news or research item is a personal recommendation to deal.


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