Pella’s investment approach combines rigorous stock selection with disciplined portfolio construction. We invest in global companies with strong free cash flow, above-GDP growth, durable competitive advantages, robust balance sheets, strong ESG credentials, effective management, and industry leadership. Valuations must be compelling, based on free cash flow yield relative to expected growth.
We invest across a broad range of industries, geographies, and company sizes to ensure a highly diversified portfolio. Our aim is to deliver long-term returns by building a portfolio that grows faster, is higher quality, and is more attractively valued than the market.
Pella invests in high-quality, sustainably growing companies trading at attractive valuations. Our proprietary framework links free cash flow yield to growth and risk, helping us identify investments that meet our return targets.
We build concentrated portfolios of 30–50 stocks that we believe offer better value, faster growth, and stronger sustainability credentials than the broader market. Each holding is classified as Core, Cyclical, or Innovation to guide risk-balanced position sizing.
Sustainability is fully integrated. We apply strict exclusions, norms-based screens, and favour companies aligned with themes like clean energy, resource efficiency, and health. Our portfolios are built to be at least 30% less carbon-intensive than the benchmark.
Independent of benchmark constraints, our process is disciplined, repeatable, and focused on long-term, risk-adjusted returns.
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Pella applies a four stage ‘IDEA’ Investment Process described below.
Identify investment candidates through quantitative screens, research, observations, and company meetings
In-depth research, prepare investment reports, and collaborate with the investment team to assess and validate the investment
portfolio construction process that incorporates diversification, exposure limits, and implementation strategy.
Monitoring stocks and adjusting the portfolio to manage risk and ensure alignment with investment cases and targets.
Pella’s Segmentation Strategy is a critical part of its process and involves dividing all companies in the portfolio in three segments (Core, Cyclical, and Innovation) to facilitate broad exposures in a risk-controlled manner.
| Core | Cyclical | Innovation | |
|---|---|---|---|
| Portfolio Weight | 60-80% | 0-30% | 0-20% |
| Return Profile | Stable | Cyclical | Rapid growth |
| Medium-Term Growth p.a. | 5-15% | >15% | >15% |
“Core” represents over 60% of the portfolio and targets companies offering stability and growth, forming the bedrock of the portfolio.
“Cyclical” companies represent a maximum of 30% of the Fund. These companies benefit from powerful, shorter-term cycles, allowing the portfolio to respond to changing economic dynamics.
“Innovation” offers exposure to innovative, fast-growing, and disruptive businesses in a risk-controlled way, with a maximum of 20% of the fund allocated to this segment.
Please reach out to our team if you have any questions, or if you would simply like to know more.
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