One less thing to worry about
As the world becomes more complex, wouldn’t it be nice to have one less thing to worry about? Walter Scott has a long track record of making the right calls. It can be easy to ride the market highs, but few know how to handle the market lows as well as they do.
For 40 years, they’ve been applying old-fashioned discipline and rigour, strictly sticking with companies that have performed consistently over the long-term.
So you can let them put your money to work, and your mind at rest.
A steady hand in the market, Walter Scott's investment reliability comes from sticking to their tried and tested formula with conviction.
Walter Scott’s 'formula' is all about finding the right type of company to invest in.
Once Walter Scott finds a suitable company it allocates capital, not as a short-term trader, but to grow wealth over many years.
For Walter Scott, the right companies have the characteristics outlined in the graphic, and detailed below.
Valuation/Trading – Company valuation justifiable by growth prospects, evidenced through valuation metrics, free float, and liquidity.
Strategy – A focus on companies with a clear business strategy, as well as their activities and divisional and geographical split.
Management/Board – Assessing the quality and experience of management, including an analysis of the experience of key executives/chair and board composition.
Integrity – Accounting methods and treatment of minority shareholders.
Financial Profile – Cash generation, strong balance sheets and a sustainable return structure.
Market characteristics – Long-term economic growth drivers, which can depend on industry size, sustainable growth trajectory and cyclicality.
Control of destiny – Pricing power and a sustainable competitive advantage. Research within 'control of destiny' includes the exploration of a company's market share, competitors, sustainable competitive advantage, pricing power and barriers to entry.
The Walter Scott team analyses and debates every investment idea with their usual discipline and rigour. The power of many minds delivers better investment decisions.
Any member of the team can champion a stock for the portfolio, researching it and presenting it to the team for debate. More often than not, the team discussion will lead to additional research and further presentations. Every stock has a champion - and every team member champions a stock.
The team is large enough to bring depth of expertise and diversity of experience to keep an eye on all stocks in the portfolio. The team is small enough to give everyone a voice and accountability.
This is the power of many minds.
Being historically defensive during down markets has been key to Walter Scott's strong long-term performance. This approach can take a big weight off your shoulders.
The Walter Scott portfolio has proven defensive through the major market drawdowns of the last 30 years. In particular, the Walter Scott Global Equity Fund outperformed the market through both the global financial crisis and, more recently, the COVID-19 drawdown in February and March 2020.
This is not by accident, but by design. Walter Scott focuses on companies with sustainable cash generation, low debt and strong balance sheets, all characteristics that can be highly valued by investors in difficult times.
This approach has given investors greater peace of mind in times of crisis, but not at the expense of overall market outperformance.
Fund performance in past crises
(AUD, net of fees)
1. Global financial crisis
(30 May 2007 to 5 March 2009)
2. COVID-19 drawdown
(31 January 2020 to 31 March 2020)
3. Market outperformance and defensive in down markets
(Fund inception 18 March 2005 to 30 April 2022)
The light blue bars represent the average return of the MSCI World ex Australia Index in down quarters and all quarters combined, expressed as 100%, on a monthly rolling basis since inception. The Fund average return in those same quarters is shown alongside in blue, expressed as a percentage of the average index return.
Past performance is not a reliable indicator of future performance.
The MSCI information may only be used for your internal use, may not be reproduced or re-disseminated in any form and may not be used as a basis for or a component of any financial instruments or products or indices. None of the MSCI information is intended to constitute investment advice or a recommendation to make (or refrain from making) any kind of investment decision and may not be relied on as such. Historical data and analysis should not be taken as an indication or guarantee of any future performance analysis, forecast or prediction. The MSCI information is provided on an “as is” basis and the user of this information assumes the entire risk of any use made of this information. MSCI, each of its affiliates and each other person involved in or related to compiling, computing or creating any MSCI information (collectively, the “MSCI Parties”) expressly disclaims all warranties (including, without limitation, any warranties of originality, accuracy, completeness, timeliness, non-infringement, merchantability and fitness for a particular purpose) with respect to this information. Without limiting any of the foregoing, in no event shall any MSCI Party have any liability for any direct, indirect, special, incidental, punitive, consequential (including, without limitation, lost profits) or any other damages. (www.msci.com)
Target investors
The Walter Scott Global Equity Fund is designed for consumers who are seeking capital growth and income distribution; are intending to use the Fund as a core component, minor allocation or satellite allocation within a portfolio; have a minimum investment timeframe of seven years; have a high or very high risk/return profile for that portion of their investment portfolio, and require the ability to have access to capital within one week of request.
The Walter Scott Global Emerging Markets Fund is designed for consumers who are seeking capital growth and income distribution; are intending to use the Fund as a minor allocation or satellite allocation within a portfolio; have a minimum investment timeframe of seven years; have a high or very high risk/return profile for that portion of their investment portfolio, and require the ability to have access to capital within one week of request.
The Target Market Determination (TMD), available at macquarie.com/mam/tmd, includes a description of the class of consumers for whom the Fund is likely to be consistent with their objectives, financial situation and needs.
Walter Scott Global Equity Fund and Walter Scott Emerging Markets Fund
All investments carry risk. Different investments carry different levels of risk, depending on the investment strategy and the underlying investments. Generally, the higher the potential return of an investment, the greater the risk (including the potential for loss and unit price variability over the short term). The risks of investing in this Fund include:
Investment risk: The Fund has exposure to share markets. The risk of an investment in the Fund is higher than an investment in a typical bank account or fixed income investment. Amounts distributed to unitholders may fluctuate, as may the Fund’s unit price, by material amounts over short periods.
Market risk: The investments that the Fund has exposure to are likely to have a broad correlation with share markets in general. Share markets can be volatile and have the potential to fall by large amounts over short periods of time. Poor performance or losses in domestic and/or global share markets are likely to negatively impact the overall performance of the Fund.
International and emerging market risk The Fund has exposure to a range of international economies, including emerging economies. Global and country specific macroeconomic factors may impact the investments that the Fund has exposure to. Governments may intervene in markets, industries, and companies; may alter tax and legal regimes; and may act to prevent or limit the repatriation of foreign capital. Emerging markets may experience lower liquidity (including as a result of securities or bond markets being closed for extended periods), potential for political unrest leading to recession or war, greater potential for sanctions to be imposed on the country or its citizens, companies or institutions, increased likelihood of sovereign intervention (including default and currency intervention), currency volatility, and increased legal risk.