The MI Chelverton European Select Fund is a Europe ex UK equity fund managed within the Investment Association guidelines for its sector. It invests solely in the equity securities of companies listed in Europe, but outside of the UK, across the size spectrum down to a minimum market capitalisation of €50m. The aim is to deliver capital growth to investors over the longer term and achieve this by buying companies with strong cash flow characteristics that the managers believe are being undervalued by the market. The fund is managed by Dale Robertson and Gareth Rudd.
Our Approach
The Fund Managers believe that a value approach to investing offers the most compelling opportunity to generate performance ahead of the market, with the added benefit of a greater safety buffer if the market corrects. Their investment process incorporates familiar elements of value investing namely a fundamental discipline, a long-term time horizon and a margin of safety.
Our Investment Process
Some value based investment approaches have shortcomings which we believe we have addressed by incorporating elements into our process which create a modern expression of the value philosophy. We focus on cash (free cash flow, cash conversion, working capital and fixed capital intensity) in order to identify those companies which the market has undervalued. Traditional ‘value’ investing incorporates mean reversion, which has been challenged by the pace of technological change and the growth of the "disruptor". Therefore, we believe the use of mean reversion increases the possibility of being caught in performance detracting value traps. In order to avoid those traps, we have incorporated explicit preventative and post event measures into our process. We do not rely on earnings as the dominant metric when earnings are simply a forecast over the short term as these are prone to error.
