Moneywise’s Helen Knapman meets Jacob de Tusch-Lec, fund manager of Artemis Global Income – one of our First 50 Funds for beginners.
What is the Artemis Global Income fund?
We’re income investors, and the aim of the fund is exactly the same as it was when it launched six years ago – it’s a way for UK investors to earn dividends [income], and to get currency diversification as we’re light on UK stocks.
How does the fund differ from other global funds?
You might not get diversification simply by going abroad; you also have to find stocks that behave differently. So this fund has been a little bit different to its peer group in that we like quirky and exotic stocks.
This doesn’t necessarily mean risky stocks – it’s not about going to the weirdest place in the world and buying shares in a company. It’s about going to Israel and finding a company people haven’t heard of or going to Scandinavia and finding a stock that’s been beaten up.
We’re also quite relaxed about whether something is a mid-cap or large-cap [a medium or large company], and whether it’s a liquid stock or not [an asset that can be quickly sold and converted into cash].
What companies have you recently bought?
This year we’ve bought stocks in a lender in the Czech Republic called Moneta Money Bank. We think it’s a safe bank, and the Czech Republic as a whole is doing well.
Another European stock we’ve been adding to is telecoms company Euskaltel, which is the ‘Virgin Media’ of northern Spain. It has performed horrifically, but I like its assets, it’s got a very good position in northern Spain, it’s got quick broadband, and it has a good dividend yield – we expect it to pay 5% to 7% every year. Plus broadband is as important as hot water these days.
Outside of Europe we’ve been adding to Johnson Controls in the US, which we’ve held for a number of years – it’s paid a dividend for about 100 years. It’s the biggest manufacturer of car batteries and car seats in the world and it makes air conditioning systems as well.
We’ve also bought Corning in the US – it made Neil Armstrong’s boots when he landed on the moon. It also made the curved screen for the Samsung TV, guerilla glass for iPhones, and fibre optic cables. We think 5G is going to get much bigger – so we think fibre optic cables are going to benefit from that.
Artemis Global Income: key stats
Launched: July 2010
Net assets: £3,168.4 million
Ongoing charge: 0.81%
What companies have you recently sold?
We’ve recently sold a number of real estate stocks, including a Singapore real estate investment trust called Ascendas. These are defensive companies but they’re not very cyclical and when the global economy picks up they continue to pay out the same dividend. We also think US interest rates will go up, which doesn’t help real estate.
We’ve also sold Pfizer – a pharmaceutical stock in the US. Americans are spending so much on healthcare that we think stocks will come under pressure.
What’s been your best investment?
DFDS – a Danish shipping company that transports anything from food and industrial goods to families going on holiday to the continent – most of its routes come in and out of the UK. It has a good management team, and it can’t be beaten on price, which means it’s hard for other ferries to compete.
What’s been your worst investment?
The investment we’ve lost the most money on – although we still have a scrap of it – is the Chinese utility company, Huaneng. It’s a stock that looked very cheap, and we thought it was very hard to lose any more money on it, but it was a value trap – we underestimated the vigilance of the Chinese government in moving from coal-fired powered plants to renewables.
Why has the fund has underperformed?
We’re in a politically driven world, and one of the reasons we’re having a bad year is because we underestimated the risk of Brexit. We’re also very overweight in Europe, which isn’t having a good time of it. A lot of money has also been going out of Europe this year as emerging markets become investable again.
But there are signs that things are looking up and if this continues we’ll be in a good position – if it doesn’t, then we’re not, and we’ll have to have a rethink. At this point we’re very much in a waiting pattern.
What’s your top tip for a beginner investor?
I bought my first stock when I was 12-years-old, and I’ve been investing for 30 years now. But if I were to start today for the first time, I would be quite conservative with the money and be diversified in my approach – both with the assets and the regions, as it’s likely to be a bumpy ride.
The man behind the fund
Name: Jacob de Tusch-Lec
Managed the fund since: Since its launch in July 2012.
Background: Jacob, who is Danish, holds a BA and MA in economics from the University of Copenhagen, as well as an MBA from New York University. He began his career in investment management in 1998 at Copenhagen-based BankInvest. He then worked at Merrill Lynch, before joining Artemis in January 2006 to manage its Capital Fund.