BMC International (Ex US)

BMC International (Ex USA) is a global equity fund whose goal is to create a high positive return over time for our shareholders by investing in quality companies in markets where we see strong underlying trends. We do this in a sustainable, balanced and risk-adjusted manner.

In this fund, we want to take advantage of the fine investment opportunities that exist, among other things, in Asia, South America and countries in Europe with good growth prospects, by investing in 30-45 well-selected companies. In a more traditional global fund, like our fund BMC Global Select, there is often a large proportion of American companies, but in this fund, with the same investment philosophy, we want to look beyond this market. It is also the case that today many savers have a large exposure to American companies in existing funds and shares, which makes BMC International (Ex USA) an interesting complement from a diversification perspective.

In simple terms, we invest in companies with expanding profits and/or too low valuations. The most common occurrence in the stock market over time is that when a company's profits increase, so too does its share price, as the stock market is rational over the long term. The companies in our fund all have profits growing by an average of 10–20% per year.

To limit the risk, we don't invest more than 5% of the fund in any one company. Moreover, all our companies have robust balance sheets, which also reduces the volatility in the fund's unit values. We also only invest in companies listed on the world's larger and most regulated stock exchanges.

We consider our task to be managing our unitholders' capital to ensure its growth over the long term. We also believe the best way to do this is to always own quality companies. We thus often have only a minimal cash position in the fund, typically less than 1%.

A mix of Champions and Special Situations

Champions are leaders in their industry or sector, have pricing power, solid balance sheets, and good profit growth—often 10–20% per year. The business models of Champions feature high entry barriers, such as patents, known brands, and economies of scale. Another common characteristic among Champions is that they invest a large proportion of their free cash flows in further development of their business, share buy-backs, or acquisitions.

Special Situations, on the other hand, are companies that are temporarily out of favor with the equity markets, often because the market does not believe in the company's ability to grow its profits. These shares typically trade at a sizable discount to their historical average. When we invest in a Special Situations stock, we often see a large discrepancy between our view of the company and the market's opinion. These investments are generally for a shorter time horizon and are more opportunistic. Our analysis often places us one step ahead, identifying internal or external drivers that allow the company to surprise the market with better profits than expected. Examples of industries where we typically find our Special Situations are construction, agriculture, real estate, and the automotive industry.

Our Champions make up the largest part of our portfolio composition (around 80%), while Special Situations account for a smaller share. This mix of Champions and Special Situations gives us the possibility to generate positive returns in a variety of stock market conditions. In simple terms, Champions have a growth focus, while Special Situations have a value focus.

The reason why we have a global investment mandate is that we want a broad swathe of companies to choose between and not have to feel confined to a specific region. Different parts of the world are good at different things: the US is good at tech, France excels in luxury goods, and Sweden is good at industry, etc., which means that the best of each of such companies can often be found in certain countries.

A crucial part of this work in discovering these is company visits and meeting senior management and other company representatives. But we don't stop there; we also visit the competitors of the companies we own. This provides us with a comprehensive picture of the company and its industry.