As the head of the BL - Equities America fund, Luc Bauler emphasises the importance of favouring stocks with solid and visible growth prospects. Portfolio turnover is low in this strategy, which is approaching its 30th anniversary.
Luc Bauler has about 25 years of experience at Banque de Luxembourg Investments, and has been directly involved in US equity strategies since 2005. BL-Equities America is a portfolio concentrated on around 40 large caps, generally with a market cap of more than $20 billion, with a track record of almost 30 years.
Conviction
Like most equity funds offered by Banque de Luxembourg Investments, BL-Equities America aims to gain exposure to quality companies with significant competitive advantages (technology, cost structure, networks, etc.), which generate high profitability and strong cash flows.
‘To be successful over the long term, a company must have such advantages, and our main job will be to identify them. We need to have high confidence in the companies we put in our portfolio. The weight of each position reflects the importance of our conviction in a case,’ says Bauler. BL-Equities America has an annualised return of over 14% over a five-year horizon, with a four-star rating from Morningstar.
The fund’s main holdings include well-known names such as Microsoft, Amazon, Nike, Apple, Visa, Alphabet and Mastercard, as well as lesser known companies such as Lowe’s and Constellation Brands.
‘Stocks like Microsoft and Visa have been in our portfolio for 10 years, with an average of almost 7 years for all the stocks in our portfolio. We have only added two new positions in the last twelve months, during the correction in March. ‘
Rotation
Luc Bauler stresses that he has not participated in the rotation from growth to value stocks. ‘We are not traders who react to the slightest news to sell. Our portfolio is typically exposed to sectors such as industrials, technology, healthcare or consumer goods; and we remain absent from banks, real estate or oil companies.
One of the main sectoral orientations is to position on companies such as Visa or Mastercard. ‘These are opportunities that remain exceptional for the next few months. The pandemic has given a boost to online commerce, and has enabled a breakthrough in credit card payments in many regions. The development of the fintech sector is also a supportive factor for these firms.’