London-based investment company J. Stern & Co. has introduced its flagship strategy to the United States through a limited partnership after first establishing its presence in this country last March.

The J. Stern & Co. World Stars Global Equity Fund LP is a concentrated limited partnership that holds positions in about 20 to 30 large-cap companies. About two-thirds of these names are U.S. companies serving global markets, while the rest are global companies headquartered in Europe, according to Christian Picot, principal at J. Stern & Co. LLC.

The fund holds long positions only and does not use any borrowing or derivatives. The company looks for names with strong and sustainable competitive positions and the potential for long-term growth.

What makes the strategy unique is that it offers daily liquidity, while most other limited partnerships provide only monthly or weekly liquidity. It also has a low turnover of around 10% annually compared with 60% for most mutual funds, Picot said, adding that this makes the long-term capital gains privileged.

The move comes almost a year after the firm opened its first office in New York. The firm offered the World Stars strategy initially through segregated accounts, but several obstacles arose for advisors with those products, Picot said. 

First, the segregated accounts have a $5 million minimum, while the limited partnership’s minimum is $200,000. Second, advisors using the segregated account must relinquish the assets under management. That is not the case with a limited partnership, according to Picot.

“What we found is that a limited partnership is really an easier format for a lot of investors who want to stay with their existing custodian,” he said. “With wealth managers, if they want to access the Stern strategy, they would have to leave their manager and open an account with us.”

Under the LP structure, he said, all investors need to do is subscribe, and they won’t have to change managers. The fund is also ERISA-compliant to make it attractive for endowments and pensions.

“So, for us to make this an ERISA-friendly product was a slam dunk because we got a lot of interest out of a number of endowments, pensions, but also family offices,” Picot said.

The primary focus for the firm is to get the World Stars strategy up to its capacity, which is up to $30 billion. The Stern family, along with a group of U.S. institutional investors, have already seeded the LP with $325 million. 

The Stern family goes back several hundred years and its members are responsible for the foundation of several major banks in France, Germany, and England, including Deutsche Bank in Germany. The French branch of the family evolved into J. Stern & Co.

Looking ahead, J. Stern wants to bring a U.S.-based strategy to the market, which will be mostly in U.S.-based global companies. He says such a fund would be of interest to U.S. investors.

“I think U.S. Stars in the intermediate and longer term is clearly of interest to U.S. investors [because] there are very few people who actually manufacture a U.S. Stars equivalent, which is a quality growth focused fund,” Picot said.

He estimated that there might be about six firms that make that product, but all could be contending with capacity issues, meaning they are reaching their limit of assets, which makes J. Stern the more attractive option.

“If I can offer something that has the opportunity to be a solution for some allocators who are nervous about the ... excess capacity of a manager who’s sitting fat on a lot of AUM and getting someone who’s hungry with capacity, I think we have room to gain some market share away from those half a dozen places,” Picot said.

The firm is looking to distribute the World Stars Global Equity Fund LP to wealth managers, family offices, the outsourced chief investment officers’ channel, and the consultant channel, as well as from direct contributions and pensions, Picot said.