HERMES US SMID EQUITY F GBP

Invests in small and mid cap companies domiciled in the US, or which derive a large proportion of their income from US activities.

  • 225.23p Price (Inc)
  • 280.45p Price (Acc)
  • 0.00% 0.00%

    Initial charge
  • 0.75% Annual management charge
  • 0.85% Ongoing charges
  • 0.00% Yield

Fund data last updated 19 November 2019

The investment objective of the fund is to provide long-term capital appreciation by investing primarily in equity or equity related securities of small and mid-capitalisation companies domiciled in the US, or which derive a large proportion of their income from US activities. These are primarily listed or traded in the US or Canada.

Fund summary

Sector North American Smaller Cos
Structure OFFSHORE FUND
Launched November, 2012
Size £765m
Yield 0.00%
Charging basis
Dividends paid 1 August, 1 February

Charges

Initial charge 0.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 0.75%
Ongoing charges figure 0.85%

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Investment process

The investable universe of 2500 is reduced down to 800 using quality and financial stability screens. The team then carry out a fundamental and qualitative assessment of company to see if has the traits they desire, which is a stable or growing economic moat, cash generation and strong balance sheets. Stocks that have these characteristics are added to the "watchlist" (about 250 stocks) from which portfolio stocks are selected. Stocks are considered for the portfolio when they are trading 20% below the teams estimate of intrinsic value. They use a 10 year DCF with a terminal growth rate of 0% which gives a conservative of intrinsic value. The fund will be broadly sector neutral and have 40-70 stocks.

The fund is management by a tight knit group of four and has been headed up by Mark Sherlock since 2009. The fund combines both quality and value which provides an attractive return profile, with the fund participating in most of the upside and less of the downside. Overall, this is a strong product and worth considering for the buylist.

Manager research

Average monthly relative returns

Bestinvest MRI

14/15 15/16 16/17 17/18 18/19 3 years 5 years Career 3 years 5 years Career
-0.08% 0.39% -0.43% 0.06% 0.58% 0.07% 0.10% 0.10% 72.60% 78.80% 81.30%

Performance figures are based on the average of monthly percentage returns relative to the benchmark index.

Mark Sherlock

Sherlock joined the Hermes US SMID team in February 2009 as co-manager of the Hermes US SMID Cap strategy and became lead manager in October 2013. He became co-manager of the US All Cap strategy in May 2015. He initially joined Hermes in 2005 as an analyst and fund manager on the UK Focus Fund. Prior to this, he was an investment analyst at Rio Tinto Pension Fund, where he had responsibility for the small and mid cap portion of the portfolio. Sherlock qualified as a Chartered Accountant with PricewaterhouseCoopers in 2002. He has a degree in Politics from Durham University, is a CFA charterholder and a Fellow of ICAEW.

Track record

Mark Sherlock has 6.4 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.1%. During the worst period of relative performance (from April 2016 - July 2018) there was a decline of 10% relative to the index. The worst absolute loss has been 18%. Statistically, we estimate the probability that this fund manager is adding value, rather than being lucky, is 81%.

Periods of worst performance

Absolute -18.00% (August 2018 - December 2018)
Relative -10.00% (April 2016 - July 2018)

About the MRI

Our unique indicator: the Bestinvest Manager Record Index (MRI) measures the likelihood that the fund manager is adding value through their decisions. It is based on their performance record over the course of their career, adjusted for the amount of risk taken. MRI is an important contributor to our fund rating system but it is also vital to take account of qualitative factors. It is also very important to select funds to form a cohesive portfolio with an appropriate overall risk level.

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Portfolio

The fund has a 6% tracking error and aims to be broadly sector neutral.

Key Investor Documents

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