Our strategy has always had low levels of turnover, so portfolio activity alone does not provide a full picture of the team’s wide-ranging research effort. This research review aims to give a greater insight into how we assess businesses and decide which to add to our emerging market watchlist and strategies.
Some of the research activity discussed here has led to portfolio change; other areas may require further work, which can sometimes lead to a decision not to invest in a particular company or sector. However, it is important that we continuously challenge ourselves to understand and assess new opportunities across all of the regions and sectors making up our investment universe and avoid falling in love with companies we already own.
Maintaining an open mind helps ensure that the portfolios we manage can meet the challenge of the future and increases the likelihood of them meeting our long-term absolute return aspirations.
What’s in this Review?
We are privileged as investors to have the breadth and depth of the investment opportunity afforded to us within the emerging world. This review offers evidence that our universe contains to our mind some of the best businesses anywhere in the world, in a wide variety of sectors and industries, that are either established and with significant runways for long-term growth or being established and at the vanguard of helping broader society meet its future challenges.
In A Convenient Source of Returns we look at how a retail model established in the early 20th century can adapt to changing tastes and technologies to produce inflation-beating long-term growth with strong returns. At the other end of the technological spectrum, we highlight in To the Moon how this year India became the first country to land a space craft on the south side of the moon. This technological achievement is indicative of the country’s ambition to grow its domestic research and manufacturing economy to meet the demands of a buoyant infrastructure programme and to develop a world-leading export capability. Significantly, this piece also highlights the importance of patience and the value of our watchlist as a place that harbours great businesses, but whose share prices we believe currently preclude generating an acceptable risk-adjusted return. It also demonstrates how, although we aren’t able to predict events that lead to market pullbacks, we are prepared to take advantage of them when the opportunity arises.
A particularly volatile industry that is predominantly located within the emerging and frontier markets is the metals and mining industry. In Thinking Like Jordan we look at how businesses that own royalties or enter into streaming agreements can take advantage of the opportunity afforded by the long-term demand for those metals and minerals that are key to the global energy transition but in a way that provides an acceptable level of both risk and reward for investors.
We hope these articles are useful in giving some insight into what we have been doing over the past year and we would welcome any comments or questions you might have, please do feel free to get in touch.
