The Fund is the first easily-accessible fund in Singapore that invests in disruptors globally. It invests in 100 stocks shortlisted from an investible universe comprising disruptive companies, i.e. disruptors. The stocks in the Fund’s portfolio are selected by a 5-factor screening process.
The Fund invests in 100 stocks shortlisted from an investible universe comprising disruptive companies, i.e. disruptors. Our analysts scour global research reports and disruption-related exchange-traded funds (“ETFs”) for stock ideas to be included in the investable universe. Our investment strategy is based upon key disruptive themes. It aims to generate returns from the following market anomalies:
a) The investment community is warming up to the idea of disruption and how it affects investment portfolios and strategies. While valuations have reflected the different growth potential of the incumbents and the disruptors, investors have yet to fully allocate to the latter under the new economy as seen in the size of traditional ETFs which mirror traditional broad market indices such as MSCI or FTSE.
b) The other anomaly is the low representation of China in the MSCI AC World Index. The Fund invests in big China-listed companies who are already leaders in social media, e-commerce and other technological innovation.
There is currently no index available to represent the performance of disruptors, hence there is currently no appropriate benchmark.
Disruptors are disruptive companies that change the traditional way an industry operates, especially in new and effective ways. These companies may range from sectors such as robotics, electric vehicles, big data, internet of things, social media etc. Please see the fund factsheet here for more information.
The investment approach is to achieve a diversified portfolio, so the LionGlobal Disruptive Innovation Fund investment team participates in the market performance of a number of disruptive themes within the investible universe when constructing the portfolio. Examples of the disruptive themes the Fund invests in are:
- augmented reality/virtual reality
- electric vehicles/self-driving cars
- big data/cloud computing
- digital wallets/payments
- internet of things/connectivity
- material science/3D printing
- media contents/social media/artificial intelligence
- precision medicine/genome research
The largest segment within the universe, which is e-commerce, has around 30 stocks.
The Fund is rebalanced on a quarterly basis using the 5-factor screening process to ensure its portfolio weights do not drift excessively.
For the Fund’s portfolio construction, there are 5 factors being considered when selecting each stock to be part of the portfolio:
- Market Capitalisation: To identify big disruptive companies which have successfully proven their innovation and will continue to disrupt incumbents.
- Price-to-Sales Ratio: To minimise the risk of investing in disruptive companies with expensive valuations.
- 3-year Earnings Per Share Growth Forecast: To identify disruptive companies with proven products or concepts based on high growth rate and earnings momentum.
- 90-day Price Volatility: To identify disruptive companies that have a foothold in the market and steady growth in its business.
- 3-year Sales Growth Forecast: To minimise the risk of investing in companies without an established service or product.
Each stock is scored based on these 5 factors. Based on the combined score of 5 factors, a weight is assigned to each stock for it to be selected as a part of a diversified portfolio with 100 disruptors.
The Fund aims to provide long-term capital growth by investing primarily in equities or equity-linked securities (including but not limited to, preference shares, real estate investment trusts and depositary receipts) of companies globally, which are potential disruptors with strong growth prospects.
The Fund invests in a globally diversified portfolio of disruptive companies through a factor-based screening process. This removes human biases and emotions, which could lead to irrational investment decisions. From an investable universe of disruptive companies, stocks are screened based on 5 factors: market capitalization, sales growth, price-to-sales ratio, price volatility, and long-term earnings-per-share growth.
The investible universe comprises companies that challenge the existing business models and whose innovative ideas have been proven and commercialized. There is no target country or sector allocation.
No, the Fund does not attempt to pick stocks to be part of its portfolio. The equal-weighted 5-factor screening process determines the 100 stocks and their respective portfolio weights.
The Fund is available in the following share classes:
- SGD Class I units
- USD Class I units
- SGD Class A units
- USD Class A units
Class I units has a lower annual management fee as compared to Class A units. Also, Class I units has a higher minimum initial investment than Class A units.
For Class A units, minimum initial investment is SGD 100/USD 100. For Class I units, minimum initial investment is SGD 100,000/USD 100,000.
For Class A units, the management fee is currently 1.00% p.a. For Class I units, the management fee is currently 0.68% p.a.
No, the LionGlobal Disruptive Innovation Fund is not a technology fund. There is no target sector or country allocation. Through the Fund, one can access and gain exposure to disruptors, with a well-diversified portfolio of 100 disruptors. The portfolio is constructed via a disciplined, factor-based approach.