In May last year, I took a look at a relatively new global equity fund, Blue Whale Growth. At the time, it was generating fantastic returns for investors. I said that, for growth investors, it was “worth a closer look.”
Fast forward to today, and Blue Whale Growth is still delivering a top performance for its investors. Here’s a look at how this under-the-radar global equity fund has performed recently.
A top-performing fund
When I covered Blue Whale Growth last year, I highlighted the fact it was comfortably outperforming both the FTSE 100 and the FTSE All-World indexes. Today, the fund – which now has assets of nearly £250m – is still beating these indexes.
For example, for the three-month period to the end of March (which included the coronavirus market crash), Blue Whale Growth delivered a return of -8%. By contrast, the FTSE 100 returned -24% and the FTSE All-World -21%. That’s a significant outperformance. And looking at its performance for the whole of 2019, Blue Whale returned an excellent return of 28%, versus 17% for the FTSE 100 and 27% for the FTSE All-World.
Overall, Blue Whale has impressed since its launch in September 2017. Of the 285 funds in the Investment Association’s ‘Global’ category, it has been the third-best performer.
In terms of why this fund has outperformed the FTSE 100 by such a wide margin, I put it down to two reasons.
Firstly, it’s a global equity product. This means portfolio manager Stephen Yiu has access to investment opportunities that can’t be found here in the UK.
Secondly, Yiu is a high-conviction manager. This means that instead of buying hundreds of stocks for the portfolio, he only invests in around 25-35 companies he believes can generate exceptional returns for investors.
Specifically, Yiu looks for companies that have the ability to grow and improve profitability over the long term, don’t face structural or imminent cyclical issues, and trade at attractive valuations.
The result of this approach is that the fund contains leading businesses such as:
Amazon, which is benefitting from the shift towards online shopping
Visa, which is also benefiting as we increasingly shop online
Microsoft, which is now a key player in cloud technology and artificial intelligence
Adobe, which has a market share of more than 50% in the digital content creation software market
Unilever, which is benefiting from rising levels of wealth in emerging markets
All of these companies have outperformed the FTSE 100 by a wide margin this year so it’s no surprise the fund has outperformed as well.
A top global equity fund
Overall, I continue to believe there’s a lot to like about Blue Whale Growth fund, despite the fact it doesn’t have a long-term performance track record.
It’s not going to be suitable for all investors. However, for risk-tolerant investors with a long-term investment horizon, I think it’s a good choice for global equity exposure.
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Edward Sheldon owns shares in Unilever and Microsoft and has a position in Blue Whale Growth. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Amazon, Microsoft, Unilever, and Visa and recommends the following options: long January 2021 $85 calls on Microsoft, short January 2021 $115 calls on Microsoft, short January 2022 $1940 calls on Amazon, and long January 2022 $1920 calls on Amazon. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.