A 584-million-mile journey

  • December 13th, 2018
  • Matthew Beddall

A full year has now passed since Havelock London was founded.

My reason for embarking on this journey was based on a vision of the future of investment management. This vision is based on two beliefs: firstly that technology will increase efficiency and lower costs for customers; and secondly that the growing abundance of data can be harnessed to quantify the uncertainties investors face and make more informed decisions.

The team at Havelock London have been putting this vision into practice and I am proud to announce that we have started deploying founder capital into a fund that operates according to our vision: LF Havelock Global Select. The investment decisions we make are grounded in data, using a combination of human and machine to give a transparent and disciplined process. The total charges (which include the ongoing charges) the fund will pay is capped at 0.99% and this includes portfolio transaction costs. The fund invests on a global basis in company shares and fixed income securities (government and corporate bonds) without using leverage or shorting. The fund’s Key Investor Information Document (KIID) and prospectus are available in English from Link Fund Solutions or from Havelock London on request.

Our focus is on finding decent companies where undue optimism is not required for us to think they represent good value.

The fact that the fund launched the day before the S&P 500 marked its “record for the longest ever bull run” is not lost on me. Does this mean I am bullish on the equity market? Or might it be over-valued and ready for a correction?

We use data to estimate what companies are worth, under a range of scenarios, which allows us to decide if we think their share price represents good value. I believe this to be a more reliable form of decision making than prophecy, and with around 50,000 listed public companies this approach fortunately only requires us to hold an opinion about a tiny fraction of them.

On average valuations are historically high, which makes it more difficult to find businesses that we think make for attractive investments. Indeed, there are some companies where I believe market prices are based on considerable optimism about their future profits. This optimism may prove to be well-founded, but it contains within it a risk of disappointment. Cost cutting exercises, low borrowing costs and reduced corporate tax rates have all helped to increase company profits in recent history but are not repeatable indefinitely.

Our focus is on finding decent companies where undue optimism is not required for us to think they represent good value. These views are formed by an analysis of a custom set of data selected to be relevant to each individual business. . Our use of data then continues to help us decide the weight we place on each investment, to monitor our assumptions and to keep an eye on how each business evolves. All of this makes for a process where decisions are driven by facts and not speculation.

On what basis do I claim we have travelled 584 million miles? It is the distance that the earth has travelled around the sun in the last year, and our approach to investing requires our feet to be firmly on the ground! I would like to thank all our supporters and encourage you to keep following as we continue our epic journey.

— Matthew

Important information: This material is provided for information only and is not intended to offer, solicit, recommend or advise on the purchase or sale of any investment. It should not be used to make investment decisions. It is not intended for any person in the United States and is not an offer to sell or solicitation of offers to buy securities or investment services to or from any US person.

The value of investments in LF Havelock Global Select (the fund) may fall as well as rise. Investors may not get back the amount they originally invested. Investments will also be affected by currency fluctuations if made from a currency other than the fund’s base currency. Past performance is not a reliable indicator of future results. Potential investors should not use this document as the basis of an investment decision. Decisions to invest in the fund should be informed only by the fund’s Key Investor Information Document (KIID) and prospectus. Potential investors should carefully consider the risks described in those documents and, if required, consult a financial adviser before deciding to invest. The fund can invest more than 35% of its value in securities issued or guaranteed by an EEA state listed in the prospectus. The KIID and prospectus are available in English from Link Fund Solutions or from Havelock London on request.

Matthew Beddall