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Introducing the Marlborough US Multi-Cap Income Fund

Brad Weafer defines the characteristics of the US Multi-Cap Income fund in his latest fund update video recorded for Portfolio Adviser.

In the video Brad gives a brief overview of the fund and goes on to talk about what differentiates his strategy, how the fund has performed over the long term and offers some stock examples.


Introduction to the US Multi-Cap Income Fund

[00:00:00] Brad Weafer: We think that the path to wealth creation is paved on the backs of great businesses. So what we're looking for is a very focused group of high quality companies with competitive advantages, generating durable profits and with good opportunities for growth in the future.

[00:00:34] Brad Weafer: Active managers can get a really bad rap. However, there's a lot of active managers out there who do little more than mimic the index that they're benchmarked against. We actually think to get differentiated results, you need to do something different. That's why in the Marlborough U. S. Multi-Cap Income Fund, we do something different.

[00:00:54] Brad Weafer: We invest in a concentrated group of 25 to 35 companies. We have sector exposure that's very different from the benchmark because we have a strong discipline for high quality companies. And you'll see, you'll see that borne out in the results. Our active share approaches 90%. Which is vastly higher than many of the funds that we benchmark against.

[00:01:18] Brad Weafer: We're looking for companies that earn high returns on capital, generally in the high teens that are growing profits per share in the sort of mid-teens range and as you might expect with those two characteristics, we expect the fund to return results that are similar. So mid-teens like returns, and that's exactly what we've gotten over the long term.

[00:01:39] Brad Weafer: We've had mid-teens returns, very competitive returns with, with the S&P 500 and broader benchmarks of U.S. stocks. Now, what I think is even more important is how well the, the fund has performed, how well the U.S. Multi-Cap Income Fund has performed in really challenging times for, for U.S. markets. Just in the last five years, we've had a pandemic, a strong recovery, inflation that spiralled out of control, and policy to deal with it, in early 2020, and in late 2018, and in 2022. The U.S. Multi-Cap Income Fund has done quite well.

[00:02:18] Brad Weafer: So, the firm, as you may have figured, is in Boston, Massachusetts, headquartered in Boston, Massachusetts. The firm manages close to 5 billion for families, individuals, and institutions. We have close to 50 employees and have been operating for over 40 years. I've been the chief investment officer of Boston financial since 2015 and I run a team of five investment professionals that manage funds on behalf of clients.

[00:02:43] Brad Weafer: Myself, I'm a Boston native. I've never left New England. I've started my career as an analyst, and that's really what I love to do researching and finding great stocks to invest for clients.

[00:03:10] Brad Weafer: One of the companies that does a great job of highlighting our approach is a company called Rollins. We purchased Rollins in the fall and Rollins is a pest control company. As you might imagine we're looking for dependable, resilient businesses. Nobody likes bugs. The old joke that the only thing that's going to survive a nuclear war is Keith Richards and cockroaches rings particularly true.

[00:03:37] Brad Weafer: Rollins runs the second largest pest control business in the U. S. It has an incredibly strong brand in Orkin and part of that sort of resilience of demand for pest control and that strong brand has helped Rollins grow revenue in every year over the last 25 years. Recession, pandemic, people still want to take care of their pests in their homes.

[00:04:07] Brad Weafer: The Magnificent Seven have been great companies, great performers they're also now 30 percent of the S&P 500, a significant weight for folks who think that they're investing in a diversified group of companies. What, you know, when we look at the Magnificent seven, they've done quite well this year in expanding an economy.

[00:04:28] Brad Weafer: We think there's some pretty big cyclical components when you break down and you forget the names of the companies and you think retail spending, semiconductors, advertising, automobiles. Those are all pro cyclical companies. We think that those companies will have a much more challenging time growing earnings through any difficulties in the economy.

[00:04:56] Brad Weafer: U. S. politics have been a challenge for the last several years, I think to put it mildly. But there's one thing we know on both sides of the aisle within the U.S., frankly, globally, Politicians do one thing well, they try to get re-elected and as we look at U.S. history, in 13 out of the last 13 re-election years in a presidential election, the S& P 500 has been positive on the year.

[00:05:24] Brad Weafer: This is largely the result of politicians trying to stimulate their electorates with spending, tax cuts and the like, and we're already seeing this playing out. And this year, you know, we're off to a great start in the U.S., the S&P 500 is up about 8 percent year to date, and we're off to another good start to make it 14 out of the last 14.

Capital is at risk. The value and income from investments can go down as well as up and are not guaranteed. An investor may get back significantly less than they invest. Past performance is not a reliable indicator of current or future performance and should not be the sole factor considered when selecting funds.