Global Mid Cap Service

Partner, Equity Research

WHAT IS IT?

 

A managed service that aims to achieve long-term capital growth by investing in the shares of medium-sized companies from around the developed world. The portfolio of 30-35 stocks is based on in-house research by the Killik & Co Equity Research team, and seeks to outperform the MSCI World Mid Cap Growth Index in the medium to long term.

WHY KILLIK & CO?

As an independently-owned investment house with a proprietary Equity Research team, we are free to develop investment ideas and strategies internally whilst avoiding any conflicts of interest. 

We believe in-depth, proprietary research that focuses on longer-term trends is crucial, and that an actively managed, direct equity approach is best for our clients.

WHO IS IT RIGHT FOR?

The Global Mid Cap Service is aimed at anyone who is able to accept higher risk, in order to potentially achieve the higher returns and diversification benefits of global mid cap investing.

The Service

Managed by our Head of Equity Research, Nicolas Ziegelasch, the Global Mid Cap Service invests purely in direct shares, not funds nor ETFs, and is benchmarked against the MSCI World Mid Cap Growth Index, which it aims to outperform in the medium to long term.

 

The portfolio of 30-35 stocks, which are selected based on in-house research by the Killik & Co Equity Research team, is relatively concentrated, but it is constructed to achieve diversification on a sectoral, regional and style basis.

The Background

The Global Mid Cap Service focuses on medium-sized businesses – those with market valuations of between $2bn and $50bn – in developed markets worldwide, which have high-quality business models, and secular growth opportunities in the areas of technological disruption, demographic changes and the environment. Global mid caps are attractive because they provide access to the middle phase of the corporate life cycle: to businesses which tend to have higher growth rates than large caps, but at lower risk than small caps.

Another benefit of investing in global mid caps is that there is less third-party analyst coverage in this part of the market. This disparity offers an opportunity to add value through proprietary research in global mid caps. Global mid caps also tend to be ‘pure-play’ businesses, with focused product portfolios that address a specific market or trend, in contrast to sprawling conglomerates with multiple product divisions. This means that global mid caps are more likely to be subject to a corporate takeover than bigger, more diversified businesses.

Our Investment Process

The Global Mid Cap portfolio is assembled through a rigorous investment process, carried out by Killik & Co’s in-house Equity Research team.

Starting with an addressable universe of c.5,000 stocks, prospective holdings must first meet one of Killik’s long-term investment themes, which are based on the Killik Strategy Committee’s assessment of secular economic, political, and social changes. These include technological disruption – from the growth of the data economy, to digital transformation, and consumer disruption – and demographical changes, such as in healthcare and among emerging market consumers, as well as efforts to protect the environment through sustainable infrastructure and the energy transition.

The Research team identifies stocks that meet these themes through quant screening, conferences and third-party research, ultimately whittling the broader mid cap universe down to a more manageable list of around 150 investable opportunities.

Typically, only half of this list – those stocks that are deemed best able to exploit thematic growth – are subject to more detailed, fundamental research. This analysis uncovers some 50 companies, for which detailed business risk scores and internal rates of return are calculated.

These risk/return scores are integral to the final stage of the investment process – portfolio construction – in which 30-35 of the most attractive securities are selected, having regard also to diversification by sector, region, and style.

Download the Global Mid Cap Service brochure

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Risks to be aware of

As is the very nature of investing, the value of your investments will rise and fall over time. Further, whilst we devote our time to sourcing the very best investments to meet your objectives, please do not assume that past performance will repeat itself and you must be comfortable in the knowledge that you may receive back less than you originally invested. This service will include exposure to equity securities that are not denominated in sterling, leading to fluctuations in the portfolio value due to exchange rate movements.

Investing in mid cap shares may carry a higher degree of risk than investing in the shares of large cap companies, such as those in the FTSE 100 Index.

Contact us

If you would like to find out more about our Global Mid Cap Service, please contact your nearest branch or our Head Office on [email protected] or 020 7337 0777.