The Viewpoint: navigating the corporate Life Cycle

Matt Kirby joined the Global Equity team in late 2024 as a fund manager and is co-manager of the Royal London Global Equity Income Fund, which recently celebrated its five-year anniversary. We asked him a few questions about his first months in the role and his plans for the future of the funds.

You’ve had around six months in your new role at Royal London Asset Management. How have you found it?

There is a special environment here that gives me the opportunity to do what I love to do. The global equity team have been nothing but welcoming and engaged. They have helped me and my fellow new starters Paul Schofield and Francois de Bruin quickly get up to speed on the proprietary tools that we get to work with. They have a strong understanding of businesses that we invest in and rightly hold us accountable if and when we ever stray off course. It’s a flat structure, where all portfolio managers (PMs) are analysts and all analysts are empowered to challenge PMs. I like that. Meanwhile, Matt Burgess and his quantitative equities team are not only good fun to work with but are able to evidence the efficacy and help us refine the output of any of the tools that we use. We’ve spent a lot of time reviewing the engine that powers our process and that has been made much easier by the data being at our fingertips.

Having built such an impressive Sustainable Equity franchise, our head of equities Mike Fox knows what it takes to succeed and how to do it the right way. This is an industry where if you pick up a few important traits from some great people then you’re likely to do well. Mike is certainly one of those that I hope to learn from over the years. Another couple of people on that list are Paul Schofield and Richard Marwood. I work with Paul on the Global Equity Diversified and US Growth strategies and with Richard and Paul on our Global Equity Income strategy. I’m enjoying learning from both of them and in these markets their calm temperaments certainly stand out.

I’ve also really enjoyed getting to know many of our clients and seeing how well they understand what we do and support what we stand for. Talking to clients about what Royal London have delivered for clients in other areas, from Sterling Credit to UK Equities, is also a nice reminder of the role the firm has played making many people’s money go a little further. I’m acutely aware that no matter how good your capital allocation may be, you’re only as good as the patience and support of your investor base – so I feel fortunate to have the clients that we do.

What has stood out to you about the team’s investment approach and particularly the corporate Life Cycle?

Our aim is to deliver balanced portfolios, supported by a differentiated process where our stock picking has the potential to deliver outperformance for our clients across multiple market conditions. This is shaped by our understanding of the corporate Life Cycle and is enabled by the quantitative tools we have at our disposal.

Our key insight is that we believe it is possible for a firm to create wealth for shareholders at any point in the corporate Life Cycle, but how a company does that varies significantly depending on the stage that they are in. Early in its Life Cycle, a company needs to successfully innovative and disrupt to drive returns on capital and growth upwards. As it transitions to the Compounding stage it needs to establish and sustain its position in a favourable end market. Then as the capital cycle eventually drives down returns towards or even below the cost of capital, management needs to prudently invest back into the business while focusing on returning excess cash to shareholders. Some companies do this a lot better than others. Some valuations reflect this reality, others don’t.

I’ll save the informational, analytical and behavioural elements of how we get there for another time but at a high level what has stood out is how beneficial this approach can be for clients over the long term. In essence, out of the roughly 5,000 stocks in our investable universe, we want to associate our clients’ money with approximately 200 companies that are managed in their best interests and aren’t too expensive. Then, having already categorised every company in our universe into a stage in the corporate Life Cycle, we are able to balance the portfolios across this plane of risk to reduce exposure to a particular style.

In essence, out of the roughly 5,000 stocks in our investable universe, we want to associate our clients’ money with approximately 200 companies that are managed in their best interests and aren’t too expensive

You mentioned the behavioural advantages of the process, can you expand on that element?

Absolutely, it’s arguably the most important and enduring aspect of any process. To get the most out of the Life Cycle approach you need to have the discipline and temperament to embrace it and the open mindedness to go where it takes you. My fellow portfolio managers have these attributes in spades. Applying this at a long-term orientated and customer-focused mutual-owned asset manager, with the support of a quantitative team that’s incentivised to continuously refine our technology backbone (this makes our global equity strategy stronger, while our qualitative assessments cycle back into their quantitative framework, making their strategies stronger) leaves us operating within an enviable set of incentives.

A behavioural trait that we will not succumb to is complacency. While our commitment to the Life Cycle approach will never change, there’s always scope for continuous improvement. Over time, can we further systematise our assessment of wealth creation by Life Cycle category? Can we further expand valuation outputs to better reflect a company’s economic reality? Can we further formulise portfolio construction? I don’t see why not. Information can be collated, consumed and interpreted to a degree that we couldn’t have imagined even five years ago – leveraging this within a refined, focused process and applying it without an illusion of control could be very rewarding.

How do you best express the Life Cycle approach in a global income strategy?

If I start with our Global Equity Diversified strategies – these are the purest expression of our process, which as I mentioned is based on the Life Cycle philosophy and enabled by our investment toolkit. My role, along with Paul and Finn Provan (co-managers on this fund), is to power the process forward, working alongside our quantitative team, getting our hands dirty in our qualitative assessment of both the companies held in the fund and new ideas competing for that capital. We then size our positions to reflect our underlying conviction while balancing the fund’s risk profile.

The Global Equity Income strategy reflects our process in a more concentrated form (around 60 stocks today), taking a higher level of risk relative to our benchmark and focusing on delivering an attractive level of income for clients that grows over time. Because of our focus on delivering income, it is more challenging (but far from impossible) to source ideas in the Accelerating stage of the Life Cycle. It should be that way, as if a company has a differentiated, disruptive value proposition then management should be putting capital behind that rather than giving the cash back to us shareholders.

Towards the middle of the Life Cycle, we find companies with higher returns on capital and attractive levels of growth. Here we can gain exposure to a range of ‘higher quality’ companies that offer reasonable yields, which are growing faster than inflation. However, we face the same issue as anyone who looks for quality growth companies – these companies can be bad investments if you pay the wrong price for them.

Price usually becomes less of a hurdle in the later stages of the Life Cycle. These companies often offer attractive dividend yields but face significant pressure from competition and obsolescence, bringing higher risk of capital destruction. It’s our job as equity income investors to dig further into the strategy and balance sheets of these companies to make sure they ‘act their age’ and sustainably deliver the income that we require.

Your background is in income investing – do you have any core principles that fit within the Life Cycle framework?  

As a natural contrarian (although if most investment professionals believe themselves to be contrarian, is our contrarian nature actually a consensus opinion?), an income approach perhaps best suits how I’m wired. The notion that ‘if either the level of income or growth of income is too good to be true, it probably is’ has served many who have come before us well, and will remain a core principle of Richard, Paul and myself when managing the Global Equity Income strategy. Thanks to the rigor of our investment process, we can apply this principle to a broad pool of companies. The broader the opportunity set, the more disciplined we are able to be both in terms of what companies we invest in and in the size of the position we hold them.

The notion that ‘if either the level of income or growth of income is too good to be true, it probably is’ has served many who have come before us well

What’s the impact from recent market volatility been on the Global Equity Income strategy, and how has this differed across Life Cycle stages?

Income funds like ours are typically constructed to be relatively defensive, outperforming in challenging market environments but struggling to keep pace in more favourable conditions. Income is easier to source from certain geographies like Europe, from certain sectors like consumer staples or financials and from certain styles like value (‘the cheaper the price the higher the yield’). The risk is that an appetite for income draws you towards yields that are unsustainable in a downturn and constrains you from investing across a wide range of opportunities for capital growth in an upturn.

Our understanding of the corporate Life Cycle has helped us avoid falling into these traps. Thanks to a focus on delivering balanced portfolios, the fund was able to keep pace, and even outperform, in 2023 and 2024 when volatility was low and markets were strong. In 2022, and year-to-date in 2025 the fund has been able to protect capital relative to the market. Some of our peers have done exceptionally well in current market conditions given their overexposure to certain regions, sectors and styles and we applaud them for that, but that is not a game that we intend to play. Our edge comes from the rigor of our process, the temperament we have when applying it and the patience of our clients to see it through.

In the short term, if we don’t see unilateral concessions that the US can define as ‘victory’ then we would expect volatility to remain elevated and would hope for the outperformance that we have delivered to continue. What is less certain is exactly where in the Life Cycle this protection might come from – will it be from being slightly underweight mega-cap tech within the early stages of the Life Cycle, from our high-quality Compounders or from our more commoditised but attractively valued Mature and Turnaround names? We also remain mindful that over the long term, opportunities like AI, the onshoring of manufacturing or the rise of anti-obesity medication are powerful investment themes being leveraged by companies to which we want to attach our client’s capital. The beauty of balancing the portfolio across the Life Cycle is that we can gain exposure to these opportunities while still delivering the defensive aspects that clients seek from a global equity income fund.

For professional investors only.  This material is not suitable for a retail audience. Capital at risk. This is a financial promotion and is not investment advice. Past performance is not a guide to future performance. The value of investments and any income from them may go down as well as up and is not guaranteed. Investors may not get back the amount invested. Portfolio characteristics and holdings are subject to change without notice. The views expressed are those of the author at the date of publication unless otherwise indicated, which are subject to change, and is not investment advice.