BLUEALPHA INVESTMENT MANAGEMENT - SELECT BCI WORLDWIDE FLEXIBLE FUND

BACKGROUND

The firm was founded in 2003 by Uys Meyer who was soon after joined by Richard Pitt. Gary Quinn, former portfolio manager at Prudential, joined BlueAlpha in 2013 as Chief Investment Officer. BlueAlpha launched their first unit trust fund in 2005. Current assets under management is R4 billion across local and global mandates, specialising in equity and multi-asset mandates. BlueAlpha is the recipient of several investment performance awards during the past 15 years.

INVESTMENT PHILOSOPHY

The firm’s investment style has a quality bias with a major focus on the earnings cycle. Earnings strength and quality have been quantitatively proven to produce superior returns. The fund will predominately invest in equities – both domestic and global - with a focus on larger capitalisation companies. The real yield of an asset class will determine the asset allocation of the fund.

INVESTMENT PROCESS

Finding new investment ideas: The firm uses a screening process which is aligned with their investment philosophy. For example, they will seek relative earnings strength and avoid relative earnings weakness.

Fundamental research: Extensive stock and industry analysis is done to understand the operational and financial drivers of prospective investments. This includes understanding economic value creation and returns.

Portfolio construction: An initial portfolio is constructed from equally-weighted bottom-up stock ideas. Stocks typically have a 4-6% individual weight. The managers are cognizant of the macro environment and determine the appropriate style tilt for the current environment rather than trying to predict macro factors. They understand and monitor the correlation between the ideas within the portfolio.

Risk control and removal of underperforming ideas: At the point of a stock entering the portfolio, the main driver for the investment idea to work is clear. BlueAlpha monitor key drivers and remove underperforming ideas or holdings where the investment case has played out as anticipated.