Subject:                                     DSM GG,US, EME"

 

 

Monthly Strategy Update:
DSM Global Growth, DSM US Large Cap Growth & DSM Emerging Markets Growth

 

Good afternoon *|FNAME|*,

DSM Capital Partners manages Global, US and Emerging market Growth strategies. All their strategies rank top quartile since inception. Global Growth outperforms the MSCI ACWI with 6% annualised since inception in 2010.

Click on the date to meet with Justin Burk, senior PM of DSM Capital:
Germany September 24
Norway September 25

Sweden September 26
Finland September 27
Denmark September 28


Valuation
After a long period of decent outperformance the valuation of the DSM portfolio's were a bit elevated. Recently they have become significantly more attractive. Please see the overview below related to their Global Growth portfolio. The last column is most relevant when looking at valuation. 

Currently the FWD 4Q P/E is 20.2 for a portfolio that grows earnings north of 30%. 


DSM believes their portfolio's are undervalued!
 
 



Philosophy and process


The EPS growth is by far the most important factor, which is why a team of 9 analysts does very in depth research in a very structured framework. This together with a very strict valuation discipline (so no Netflix, Amazon etc) creates long term high Alpha, performance below as evidence. DSM holds only about 65 stocks over all portfolios. 

All of us at DSM remain focused on earnings because we believe that earnings are the primary factor that will “grow” the value of a business over time. Importantly, strong and growing earnings, when combined with reasonable valuations, drive stock prices higher over time. Below we have listed the last thirteen quarters of revenue and earnings growth in the portfolio.

Recent turmoil:
In recent weeks the equity markets have been negatively impacted by fears of “trade wars” brought on by the actions of President Trump, who claims he wants to achieve free and fair trade with America’s trading partners. These fears followed concerns during the first quarter that strong global growth would usher in a period of rising inflation causing the US Federal Reserve to rapidly hike interest rates, with the European Central Bank doing the same shortly thereafter. Macro issues such as the PIIGS (Portugal, Italy, Ireland, Greece, Spain) debt default scare of 2011, the deflation fears of 2016, and the inflation and trade fears of 2018, tend to generate selling across the markets without regard to the over or undervaluation of the assets being sold. Moreover, investors often take profits in those stocks that are up the most to “protect“ their gains. Certainly, after many years of appreciation, concerns such as these can lead to a market correction.

All of us at DSM remain focused on earnings because we believe that earnings are the primary factor that will “grow” the value of a business over time. Importantly, strong and growing earnings, when combined with reasonable valuations, drive stock prices higher over time. As we have said in the past, we expect earnings to continue to grow at a mid-to-high-teens rate through 2022, while the portfolio is valued at approximately 20.3x next twelve months of earnings through September of 2019, which we believe is quite attractive.

In our opinion, we are identifying predictable / quality growth companies better than at any point in our sixteen-year history. We are proud of our investment team and of the long-term returns we have generated for clients. We continue to believe that the portfolio is very attractively priced.

Please click 
here for the complete Global Growth investment letter and performance review.

DSM Global Growth
In July the DSM Global Growth strategy underperformend the benchmark (MSCI ACWI) with 3.75% gross of fees. Year to date the DSM Global Growth strategy outperformed the benchmark by 1.67%.
Since inception (Oct 20010) the DSM Global Growth strategy ranks 4th percentile vs peers in the eVestment database with an annualized outperformance of 5.56% gross of fees. The strategy is available in UCITS. 
DSM Global Equities versus peers

DSM US Large Cap Growth
In July the DSM US Large Cap Growth strategy underperformed the benchmark (Russel 1000 Growth) by 1.88% gross of fees. Year to date the DSM US Large Cap Growth strategy underperformed the benchmark by 2.55%. Since inception (Jan 2002) the DSM US Large Cap Growth strategy ranks 9th percentile vs peers in the eVestment database with an annualized outperformance of 2.2% gross of fees. The strategy is available in UCITS. 
DSM US Large Cap Growth Equities versus peers

DSM Emerging Markets Growth
In July the DSM Emerging Markets Growth strategy underperformend the benchmark(MSCI EM) with 4.35%. Year to date the DSM Emerging Markets Growth strategy outperformed the benchmark by 3.21%. Since inception (Jul 2017) the DSM Emerging Markets Growth strategy ranks 1st percentile vs peers in the eVestment database with an outperformance of 7.19%.

Click
here or scroll down to go to the DSM Global Growth related information in this email
Click
here or scroll down to go to the DSM US Large Cap Growth related information in this email
Click
here or scroll down to go to the DSM Emerging Markets Growth related information in this email

 

 

DSM Global Growth 

 

Strategy outperforms almost all peers over all periods
Performance DSM Global Growth v. Benchmark and Peers over multiple periods

 

 

DSM Global Growth Composite data                                           DSM Global Growth Fund Facts
 

Alpha

4.97

 

 

 

ISIN

LU1016061043

Beta

1.05

 

 

 

Benchmark

MSCI All Country World Index Net

Std Dev

14.05

 

 

 

Currency

EUR

UMC

124.28

 

 

 

Bloomberg ticker

DSMGGI2

DMC

93.61

 

 

 

Asset Class

Equity

Information Ratio

0.86

 

 

 

Type

Growth

Tracking Error

6.50

 

 

 

Region

Global

Sharpe Ratio

1.04

 

 

 

Dividend policy

Accumulating

 

Active Share

92.44%

as of 30-6-2018

 

 

 

 

 

Data as of 31-7-2018 source eVestment

 

DSM’S INVESTMENT PHILOSOPHY

Quality growth companies with predictable streams of earnings generate attractive rates of return over time when purchased at reasonable prices.
Click  here for: 
DSM Global Growth Philosophy and investment process 

 

 


Higher Upside and lower Downside Capture leads to superior returns

Upside/Downside Capture DSM Global Growth v. Benchmark and Peers

 

 

DSM Global Growth active trading performance

 

Buy and Hold vs Active Management


 

*The table above is as of 30-6-2018 and shows the performance of the actual DSM strategy and a virtual buy and hold portfolio. The buy and hold portfolio is based on the performance of weights and holdings per the 31st of December (no trading took place). You can clearly see that trimming, adding and switching names does add value.

 

 

 

Links to updated presentation and other documentation

Click to receive the information


 

 

 

DSM US Large Cap Growth 

 

DSM US Large Cap Growth Composite data                               DSM US Large Cap Growth Fund Facts

Alpha

2.77

 

 

 

ISIN

LU1016061126

Beta

0.91

 

 

 

Benchmark

Russell 1000 Growth

Std Dev

14.50

 

 

 

Currency

EUR

UMC

100.44

 

 

 

 

 

DMC

89.46

 

 

 

Asset Class

Equity

Information Ratio

0.39

 

 

 

Type

Growth

Tracking Error

6.48

 

 

 

Region

United States

Sharpe Ratio

0.63

 

 

 

Dividend policy

Accumulating

 

Active Share

80.88%

*as of 30-6-2018

 

 

 

 

 

Data as of 31-7-2018 source eVestment

 

DSM’S INVESTMENT PHILOSOPHY

Quality growth companies with predictable streams of earnings generate attractive rates of return over time when purchased at reasonable prices.
Click  here for: 
DSM US Large Cap Growth Philosophy and investment process 

 

 


Consistent Out Performance since inception
v. Benchmark and Peers.DSM US Large Cap GrowthReturns

 

DSM US Large Cap Growth active trading performance

 

Buy and Hold vs Active Management


 

*The table above is as of 30-6-2018 and shows the performance of the actual DSM strategy and a virtual buy and hold portfolio. The buy and hold portfolio is based on the performance of weights and holdings per the 31st of December (no trading took place). You can clearly see that trimming, adding and switching names does add value.

 

 

Links to updated presentation and other documentation

Click to receive the information


 

 

 

DSM Emerging Markets Equity Growth 

 

Returns DSM Emerging Markets Growth v. Benchmark and Peers.
Strong outperformance since inception

 

 

DSM has launched their Emerging Markets Growth strategy last Summer (July 2017), the strategy follows the same successful DSM investment philosophy and process of the Global Growth and US Large Cap Growth strategy.

DSM Capital runs concentrated growth strategies that are bottom-up, idea driven with an intermediate to long-term investment horizon. A strict valuation discipline differentiates DSM from other growth managers.

This leads to an unique strategy focused at concentrated growth active in Emerging Markets Equity space, since inception the strategy has a performance of 16.92% till the end of July gross of fees, outperforming the benchmark and most peers. 

 

 

More about DSM

The firm opened its doors to clients at the beginning of 2002 and is 100% employee owned. There is a strong alignment of interest with clients as the co-founders and employees have most of their assets invested in DSM strategies.

DSM Capital runs concentrated growth strategies that are bottom-up, idea driven with an intermediate to long-term investment horizon. A strict valuation discipline differentiates DSM from other growth managers.

Since inception the Global Growth and US Large Cap Growth strategies rank in the top few percentiles versus all peers in the eVestment database till July  2018. 

DSM has a team of 9 analysts and investing in 56 stocks across all strategies. 97% of time of the analysts is spent on analyzing and estimating future earnings. Investments are only made under a strict valuation discipline. Periods of underperformance have always been followed by a period of outperformance as earnings of the DSM stocks typically come through conform DSM’s expectations and valuations follow. 

 

Best regards,

 

 

Candoris Strategies: www.candoris.nl
Candoris Fund solutions: www.candoris-fundsolutions.com

 

 

* Performances are annualised. The latest data is still preliminary. Data quoted is past performance and current performance may be lower or higher. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate.. "This email is intended to be reviewed by only the intended recipient and may contain information that is privileged and/or confidential. If you are not the intended recipient, you are hereby notified that any review, use, dissemination, disclosure or copying of this email and its attachments, if any, is strictly prohibited. If you have received this email in error, please immediately notify the sender by return email and delete this email from your system."
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