Wellington Management has launched the US Dynamic Equity fund. This Ireland-domiciled Ucits fund aims to outperform the market by investing in a select group of high-conviction "best ideas" in combination with passive exposure to the S&P 500 Index.
The weights of the two components will vary depending on the number of stocks in which the manager has high conviction. This cost-effective approach will appeal to investors looking for a fund that combines passive investing with active management's potential for outperformance.
The fund's philosophy is based on research indicating that many portfolio managers generate a large percentage of overall returns from just a few high-conviction positions, but they spend a lot of time researching low-conviction stocks to populate the portfolio, which may add little value.
Fund manager Stephen Mortimer said: "I believe investment returns can be mainly driven by a fund's top holdings. I seek to maximise potential outperformance by focusing on ‘best idea' stocks only."
Mortimer has over 22 years' investment experience. As well as conducting his own fundamental analysis, he draws on Wellington's wider in-house investment research platform — including over 50 career analysts dedicated to global industry research.