fund

Rated

This is one of our rated funds. They’re the ones our experts believe will do well for investors over the longer term. Top of the class!

Morgan Stanley US Advantage F GBP

Large-cap US equity fund focusing on companies that exhibit sustainable growth.

  • 1946.60p
    Price (Inc)

    These are the shares in the fund that pay out an income to clients. The income is made up of the total dividends – the money a company can pay out to its investors – from the companies in the fund.

  • -
    Price (Acc)

    These are the shares in the fund that don’t pay out an income to clients. Any dividends – the money a company can pay out to its investors – are reinvested into companies in the fund. Despite no income, the shares should be worth more over time. Good incentive, eh?

  • 0.00%

    Initial charge

    Some funds charge you when you first invest, which is aptly known as the initial charge. They’re usually between 3-5% but at Bestinvest, we usually don’t charge you a penny!

  • 0.40%
    Annual management charge

    This is how much the fund management company charges to run the fund. It’s like paying a babysitter, dog sitter or house sitter (that makes well-informed, heavily researched changes to improve your baby/dog/house when needed).

  • 0.55%
    Ongoing charges

    This stands for Ongoing Charges Figure. It’s the cost of running a fund and includes admin fees, manager fees, administration costs, etc.

  • 0.10%
    Yield

    How much the fund is currently paying out in income to investors. It’s NOT to be confused with the overall growth of a fund – a very different thing indeed. It’s also NOT a guarantee of future pay-outs, just a snapshot. This is more what it’s not than what it is…

Prices as at 25 January 2022, fund commentary last updated 19 October 2021

The fund seeks to outperform the S&P 500 Index over rolling three-to-five-year periods. Fund manager Dennis Lynch invests in large-cap US companies which have sustainable competitive advantages and redeploy capital at high rates of return. This, he believes, will generate long-term strong absolute returns. His holdings include social media giant Twitter and video communications group Zoom. Lynch has a bottom-up investment approach, looking at a company’s fundamentals such as return on invested capital and brand strength. He also targets companies benefiting from cultural change in society or favourable demographics.

Fund summary

Sector North America
Structure OEIC
Launched November, 2016
Size £769m
Yield 0.10%
Charging basis Income
Dividends paid Acc units only

Charges

Standard initial charge 0.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 0.40%
Ongoing charges figure 0.55%

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Investment process

The management team’s investment universe is established companies within the market cap range of the S&P 500. Ideas for the fund are generated through seven methods including industry contacts, team discussions and research. The team is also encouraged to take a day out from the office and read something not directly related to finance to stimulate their thinking. They look for companies with high and improving return on invested capital, - which the team believes is more revealing than earnings growth - and free cash flow yield. Targets also need to have competitive advantages such as strong brands, scale, network effects, or advanced technology and IP. In addition, they look for stocks which have been mispriced because of market biases. This includes traditional valuation techniques failing to account for new or unique business models and short-term bias, where investors are focused on the next event such as quarterly earnings results rather than long-term value creation. The result is an investment thesis which states why they believe their companies are unique, poised to take advantage of their competitive position, and generally underappreciated by the market. The portfolio is fairly concentrated at between 30 and 40 names, with nearly 50% of assets invested in the top ten. Its main sector exposure is to Information Technology followed by Communication Services.

Manager Denis Lynch leads Counterpoint Global, a growth orientated investment team that sits as a boutique within Morgan Stanley Investment Management. The 11-strong US Advantage fund team has a solid working culture, referring to each other as investors rather than analysts to create a sense of ownership and shared responsibility. It is a very stable and highly experienced team boasting on average 25 years in the investment sector. As such they have developed a very clear investment philosophy and process focusing on steady growth businesses. This compares with their other large-cap fund – US Growth – which targets high-growth disruptive companies. The US Advantage fund has a long and impressive track record of performance against both the S&P 500 index and the Russell 1000 Growth index.

Manager research

Average monthly relative returns

  • 17/18 0.07%
  • 18/19 0.45%
  • 19/20 0.02%
  • 20/21 3.05%
  • 21/22 -1.21%

Bestinvest MRI

  • 3 years 0.62%
  • 5 years 0.48%
  • Career 0.27%
  • 3 years 85.30%
  • 5 years 89.60%
  • Career 95.50%

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

Dennis Lynch

Dennis Lynch is Head of Counterpoint Global at Morgan Stanley Investment Management. He joined Morgan Stanley in 1998 and has 25 years of investment experience. Prior to joining the firm, he worked as a sell-side analyst for J.P. Morgan Securities. Dennis received a BA in political science from Hamilton College and an MBA with honors in finance from Columbia University.

Track record

Dennis Lynch has 13.8 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been +0.27%. During the worst period of relative performance (from December 2020 - October 2021) there was a decline of 15% relative to the index. The worst absolute loss has been 17%. Statistically, we estimate the probability that this fund manager is adding value, rather than being lucky, is 96%.

Periods of worst performance

Absolute -17.00% (July 2004 - February 2009)
Relative -15.00% (December 2020 - October 2021)

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

30-40 stocks

Constraints

Max position size 10%

Key Investor Information

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