Using our proprietary investment process, worldwide network and unique knowledge base, we invest alongside our clients to benefit from the key structural changes in our world today.

01.

Idea generation

Munro identifies sustainable growth trends that are under-appreciated, not well understood and mispriced by the market, and in our view, the resulting winning and losing stocks.

02.

Idea evaluation (qualitative)

Munro looks for five key company characteristics to gauge whether a listed company is likely to benefit or lose from a particular growth trend and whether that will be sustained over an extended period of time.

03.

Idea evaluation (quantitative)

Munro uses three valuation based tests to quantify earnings upside/downside, multiple upside / downside and time based catalysts. Ideas graduate from the universe to the portfolio based on the relative upside generated from these tests.

04.

Portfolio construction

Qualitative and quantitative tests combine to build a high conviction, index, region and sector unaware portfolio of investments. Munro's absolute return  heritage means risk management and proprietary stop loss review framework are integral.

Idea Generation

Global equities

Over 24,000 listed
global equities

Growing equites

Many profess to grow.
We identify structural growth

Secular growing equities

Idea Evaluation (qualitative)

Growth

Faster earnings versus peers and a growing total addressable market.

Economic leverage

Pricing power or economic leverage to be able to improve margins.

Sustainability

Ability to sustain growth due to scale, position, able to improve margins.

Control / ESG

Strong management ownership, ESG and incentives.

Consumer perception

Strong customer reviews and rapid adoption of its products and services.

IDEA Evaluation (QUANTITATIVE)

Potential for
earning surprise



Has the market adequately considered
the structural forces at play
when forecasting company earnings?

Potential for multiple
rerating / derating


Has the market adequately considered
the quality of the company and its ability
to execute on the structural forces at play
when assigning an investment multiple?

Catalyst


What timeframe, volatility and catalysts
are required to meet the price target?

Best ideas

Portfolio Construction
(Long/Short absolute returns)
Portfolio Construction
(Long only relative returns)

Portfolio concentration

Typically 30-50 high conviction positions

Portfolio concentration

Typically 20-40 high conviction positions

Position sizing

Average longs of 3% and average shorts of 1.5%

Position sizing

Average longs of 3%

Exposure management

Driven by bottom-up idea generation
Typical gross exposure between 50-150% and typical net exposure between 50-100%
Exchange traded option positions frequently used to protect downside

Exposure management

Generally fully invested
Maximum 10% cash

Short philosophy

Shorts are typically represented by structural losers or misplaced securities and are subject to a more prudent risk-taking approach

Short philosophy

Shorting is not permitted in the long-only, relative returns strategy

Aggregate portfolio risk

Portfolio management system used to provide real time reporting and pre/post trade compliance. The investment team actively measures portfolio correlations, sector risks, style exposure and aggregate valuation metrics

Aggregate portfolio risk

Portfolio management system used to provide real time reporting and pre/post trade compliance. The investment team actively measures portfolio correlations, sector risks, style exposure and aggregate valuation metrics

RISK MANAGEMENT
(Long/Short absolute returns)
Risk Management
(Long only relative returns)

Exposure

Maximum gross exposure limit of 200%
Maximum net exposure limit of 100%

Exposure

Maximum net and gross exposure limit of 100%
Maximum cash exposure of 10%

Single positions

Maximum long position of 10% of NAV at cost
Maximum short position of 5% of NAV at cost

Single positions

Maximum long position of 10% of NAV at cost
No short positions

Concentration

No sector or region concentration limits
In practice, Areas of Interest create differing sector exposures

Concentration

No sector or region concentration limits
In practice, Areas of Interest create differing sector exposures

Liquidity

80% of individual position sizes are limited to 30% of 10 days average daily volume (trailing 90 days)

Liquidity

75% of individual position sizes are limited to 30% of 20 days average daily volume

Stop losses

Individual stock stop loss formal review at 20% drawdown, 10% for shorts
Gross exposure formal review at 3% drawdown
Net exposure formal review at 5% drawdown

Stop losses

Individual stock stop loss formal review at 20% drawdown

Currency

Manage for base currency benefit, with a bias to hedge back to base currency
Default currency hedge of 50%

Currency

Unhedged

HOW WE INVEST

Our philosophy

Areas of interest