The ACPI Horizon UCITS Fund was launched in June 2015 with the purpose of providing investors with a liquid, cost-effective way to access the investment skills of ACPI’s investment management team.
The investment objective of the fund is to achieve above average investment returns over the business cycle with an acceptable level of risk. The fund is a benchmark agnostic, absolute return product that invests in different asset classes, such as equities, bonds, currencies and other eligible funds. Typically, the equity allocation can range between 0% and 60% with the remainder in bonds and cash. Most of the time, the equity exposure is between 25% and 45%. The majority of exposure will be in developed markets.
We are targeting an average annual return over the cycle of 6-8% generated from long-term investments, income and trading profits, with an average volatility of approximately 6%. The fund‘s objective is to generate high risk-adjusted returns over the market cycle with a focus on capital preservation.
Starting from a blank sheet, firstly, we determine the portfolio structure which is primarily driven by the relative attractiveness (return/risk profile) of equities versus fixed income. We also decide on liquidity levels and the amount of exposure to alternatives. Secondly, the individual teams determine the composition of each asset class portfolio in a bottom-up research-driven process following the guidelines from our macro analysis.
Within our macro-driven investment framework we look for undervalued companies with strong balance sheets, defensible business models, high and sustainable free cash flows, run by strong management teams in attractive markets.
Valuation is part of risk management, buying expensively locks in a permanent loss of capital. We have a long-term investment horizon and, in addition to quantitative measures, attach great importance to confidence in individual ideas.
We focus on refreshing the bottom quartile of the portfolio with new ideas as we believe the better is the enemy of the good. The key to making money is not losing it; we disproportionately focus on risks and cut losers early before they inflict lasting damage.
Our investment universe in sovereign and credit markets is focused on OECD countries and hard-currency issuers in addition to tactical opportunities outside that scope. We are conscious that we are operating at the tail end of a 30+ years bull market in fixed income and only invest if we see compelling value.
We focus on the generation of total returns in fixed income, i.e. a combination of core holdings with tactical opportunities exploiting certain dislocations in markets. We carefully chose the risks we want to take and focus on those where we get sufficiently compensated for accepting them. We minimise all residual risks by diversification, hedging or avoidance.
We invest in long-only and hedge funds, leveraging on the research process applied to our fund-of-fund mandates.
Our investment process for long-only equity funds comprises the steps below. We use a similar process for fixed income and hedge funds.
We believe in sensible diversification but also understand its limitations. We feel that high-conviction ideas should have a meaningful enough position in a portfolio to make an impact. We will always stick to our core competencies – areas we understand. We avoid diworsification.
“A lot of companies have gotten into other businesses that were away from their basic businesses, something I call ‘diworsification.’” – Peter Lynch
ACPI Investment Limited (ACPI IL) & ACPI Investment Management Limited (ACPI IM) are authorised and regulated respectively in the United Kingdom by the Financial Conduct Authority and in Jersey by the Jersey Financial Services Commission. This promotion has been approved by ACPI Investments Limited (FCA Register IRN 192403). Both companies are now part of Union Bancaire Privée.
Find out more at www.ubp.com.