Analysis of the EDM International Strategy Fund
6 SEPT, 2024
By Andrea Sepúlveda from LatamSelf
The EDM International Strategy fund, domiciled in Luxembourg, was launched in March 2018 and invests in a diversified portfolio of companies listed on European regulated markets. It is a fund that has received recognition and ratings from major financial information platforms worldwide and, despite not having a specific investment objective in terms of sustainability, is classified as article 8 of the SFDR.
Let's see what its most interesting features are.
Features of the EDM International Strategy fund
- Investment strategy: examining its investment policy, the fund's strategy is quite active and high conviction, as will be seen later. It uses the index exclusively for performance comparison purposes, but the specific selection of companies is left to the discretion of the investment team and the management company's philosophy. The fund seeks to invest in global leading companies based in Europe, representing businesses with expectations of long-term sustainable growth, solid fundamentals, and excellent management teams. In this way, it maintains a balanced and flexible portfolio, the result of a rigorous analysis process and a deep knowledge and relationship with the companies. This fund is suitable for long-term investors, with a time horizon of at least 5 years, who have a globally diversified portfolio and who can assume a certain level of short-term loss risk, with the aim of achieving a potentially higher return.
- Investment team: the fund's investment team consists of Beatriz Lopez and José Francisco Ruiz. Beatriz, Partner and Portfolio Manager (PM) of the company, has over 20 years of investment experience and has been part of EDM since 2007. José Francisco Ruiz, also a Partner and PM of the company, has over 30 years of experience in equity investments and has been part of the Europa Equity team since 2017.
- Assets: as for the specific fund, as of the end of June 2024, it managed over 400 million euros in assets.
- Management company: as for the management company, EDM, it was founded in 1989 and has over 30 years of experience in portfolio management. EDM strives to maintain in each of its strategies the corporate philosophy, and this fund is no exception. The company is committed to maintaining a team of excellent analysts and managers, with a thorough proprietary analysis process, and aims to keep investments in its portfolios long term. As of 2023, EDM managed assets for over 4 billion dollars (AUM).
Evolution of the EDM International Strategy fund
Note: Past returns are not indicative of future returns. The fund's returns may increase or decrease due to exchange rate fluctuations.
In general, the fund's profitability shows mixed performance; on one hand, analyzing the long-term results, a good 5-year return can be observed, a time horizon considered by most institutional investors. However, looking at the performance over a medium period, namely 3 years, the return decreases considerably compared to the benchmark. In the short term, the return is slightly negative compared to the benchmark.
The strategy's factsheet does not show specific risk data, but from an external source we can find recent information on various time horizons. At 3 years, the alpha results are conservative and it is important to note that the team is taking a slightly higher risk than the market for its choices (beta > 1).
The fund is characterized as a concentrated strategy, especially in the selection of companies. The top 10 companies in the portfolio represent about 50% of the total, demonstrating the fund's active approach, with a strong conviction compared to the benchmark that includes over 400 companies.
As for the geographical allocation, it is noteworthy that a considerable part is invested in the United States, confirming what is indicated by the investment policy: “mainly, but not exclusively, in regulated European markets”.
Conclusions
Advantages
- Institutional size and over 5 years of strategy
- Investment philosophy consistent and in line with the management company
Disadvantages
- Being a concentrated and high conviction fund (without benchmark), investors might expect better returns.
