Discretionary Investment Management | Sam Dovey
05 Jun 20
Investment update - Business as normal - ish
There are very few things in the world at this point in time, or indeed in 2020 full stop, that are classed as “business as normal”. The majority of us are working from our home studies, kitchen tables or makeshift bedroom offices – that is of course unless you are an essential worker, putting yourselves at risk every day, and for that we thank you from the bottom of our hearts.
But behind all the chaos that is COVID-19, there is one part of our fund monitoring process that has carried on regardless (despite not being able to leave the island). For those that may not know – one of our key criteria when investing with fund managers is that they are ‘open, honest and transparent’, and if they cannot abide by this very simple rule, then they do not deserve to be stewards of your capital.
Another of our criteria is meeting the fund manager face to face in their offices, they are very different beasts when on their home turf, and we get to ask them questions (we do of course always provide a full agenda – but we love a back pocket question!). Given the restricted travel arrangements, we have not been able to go to London, but we have a diary of annual meetings that need to take place and we would not be carrying out our promise to you our clients if we did not execute these meetings.
So, we have carried on as normal, well normal-ish; we have had our scheduled meetings, but they have happened over Zoom, Teams, Skype or good old fashioned conference calls. During the last week of May, we spoke to all our global equity managers. The managers of GuardCap and Lindsell Train being in London and Terry Smith, of Fundsmith, who was just about coping with the winter weather in Mauritius (a balmy 27 degrees….). The only real difference is that now my dog Mouse listens into the meetings!
One of the meetings the team always look forward to is Arisaig Global Emerging Consumer and, had the Ravenscroft annual investment presentation gone ahead in March, I would have introduced you to the fund – it is the purest play on the emerging consumer. Our call took place with the manager Hugo Robinson on Wednesday 3rd June on Zoom – he was in Somerset, and the Ravenscroft team were scattered across Guernsey.
They have always been extremely open, honest and transparent and therefore the meeting lasted two hours to enable us get all the answers. Given where they invest, we wanted to ask how things were going in Asia and China, as their economies have been open for a while, all be it not at full capacity. The upshot was, “so far, so good” and the underlying holdings within the fund have held up extremely well. In fact, Arisaig, as at the 2nd June, was only -0.3% for the year in GBP terms versus the MSCI Emerging Markets Index at -7.8%.
What came out of the meeting was that quality, dominant players are the key to success and sustainability. This fund does come in at a high price on the price earnings ratio, but when they have an expected compound annual growth rate of 17%, we are prepared to hold for the long term, to enable you to potentially reap the rewards of this long term irrefutable theme.