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global founders fund

overview

Objective

Deliver long term returns to our investors that exceed the growth of the global stock market.

Investment approach

  • Invest in a high conviction portfolio of quality listed stocks around the world
  • Focus on global, founder-led companies
  • Long only, unhedged

Structure of the fund

  • Unit Trust
  • Lumen Investment Management Pty Ltd (trading as “Lumenary Investment Management”) is the investment manager and trustee for the Lumen Global Founders Fund

Fund details

  • Minimum investment: AUD $200,000
  • Benchmark: MSCI All Country World Net Index in AUD
  • Portfolio holding: 10 to 30 stocks
  • Inception date: 7 July 2017
  • Distribution timing: Annual ex date of 30 June, paid in July each year
  • Investor reporting: biannual investment strategy letters, annual statements with personalised performance, portfolio value, and tax information.

Fees

  • Ongoing fee: 1.20% p.a. of value each investor’s holdings. Comprising of management fee (1.00% p.a.) and administration fee (0.20% p.a.)
  • Performance fee: 16.5% of the return by which the fund (after ongoing fees have been paid) exceeds the MSCI All Country World Net Index (in AUD) (the Benchmark)

Performance is individually tracked for each investor, measured over the entire period of investment. The return is measured starting from the date an investor enters the Fund. It is calculated every 30 June and when you exit the Fund. No performance fee is payable unless the Fund has generated the investor a positive return that exceeds the return of the Benchmark.

If the return of the Fund is less than the Benchmark return, no performance fee is charged and the shortfall will be carried over and applied against future calculations of the performance fee, until the return of the Fund catches up to the return of the Benchmark

Key benefits

  • Exposure to global founder-led companies
  • Diversification into global equity markets
  • Aligned fee structure that charges performance fees only for what it delivers to each investor over the long term

Key risks

  • Short term volatility in the stock market. We have a long term investment horizon and do not recommend you invest with us if you anticipate holding the investment for less than 3 years
  • Our concentrated portfolio means our returns will significantly differ from the market average
  • Foreign exchange risk. The fund is unhedged and movements in currencies will impact on returns. Our strategy is to wait for currency advantages to present themselves over the long term.

strategy

Invest in a selection of exceptional global founder-led companies over the long term.

Stock selection

Our portfolio holds 10 to 30 stocks from around the world. We are very selective and any potential investments must pass the following investment assessment process:

  1. Screen stocks across global stock exchanges
  2. Shortlist stocks with sustained growth runway and strong fundamentals
  3. Detailed research into management quality, competitive landscape, market positioning and growth opportunities
  4. Company valuation and determination of target price range
  5. Buy the stock when it becomes underrated and falls to a level within our target price range

We will not invest in companies that do not meet all of these criteria.

Quality over quantity

Our focus is on holding a concentrated portfolio of high quality stocks that will outperform the global stock market over the long term. We focus our efforts in analysing the true underlying quality of companies, rather than the number of companies in our portfolio.

We do not ascribe to a scatter-gun approach of holding an excessively large number of stocks. This approach would dilute the performance of the quality stocks we hold and guarantee a mediocre result.

Diversification

We diversify the portfolio by investing in companies spanning a wide range of industries around the world.

We protect the portfolio from volatile stock market movements through the quality of the companies we invest in and their competitive advantages, not necessarily by increasing the number of stocks we hold.

Allocation

The companies we invest in have all passed our rigorous investment assessment process. How much capital we allocate to each investment is determined by our assessment of the prevailing stock price and foreign exchange rates in the market.

We set internal limits on the maximum level of investment we make in any one company. These limits ensure the portfolio remains balanced.

Foreign currency

The fund is unhedged. The value of the portfolio will move with changes in both underlying stock prices as well as exchange rates.

Our strategy with exchange rates is to utilise our advantage as long term investors. We use prevailing exchange rates to our advantage by focusing our stock selection in countries with weaker currencies to gain maximum value for our investments.

We take a long term view so we have the ability to be patient and wait for favourable rates to present themselves rather than predicting short term exchange rate movements.

Dividends

The companies we invest in all have high levels of revenue growth and cash flow generation. Our preference is for these companies to retain their profits for future growth. The value of these companies compound at a much higher rate than if the profits were to be paid out to investors as dividends.

Our strategy is to invest in companies with a strong ability to reuse their profits to continue reinvesting in innovation for their business.

Risk management

The protection against risk is in the quality of companies we invest in.

Our risk management process focuses on ensuring we invest in truly valuable companies that will continue to grow over the long term.

With our long term mindset and investments in quality companies, we tend to outperform during down markets.

In up markets when most stocks are rising, we expect our performance to be at or around market averages.

Review process

We monitor our investments to check that their competitive advantages remain robust. We look through the noise of short term market sentiment to check for any changes in corporate governance structures, level of innovation and implementation of strategic projects.

Our default position is to hold investments over a long horizon, however we will exit investments if we observe deterioration in a company’s true quality.

Conversely, we will increase our investment in a company if we see significant undervaluation by the rest of the market.

investments

Our holdings include companies from all around the world.

S. KOREA
USA
DENMARK
SWEDEN
GERMANY
NETHERLANDS

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