Quarterly Review Q3 2024 - Cautious - Flipbook - Page 11
The facts behind the fund
We are often asked how we 昀椀nd new managers. What we don’t do is use backward-looking metrics to see who
has been performing well over the last 1 or 3 years, a much used method in our industry but a sure-昀椀re route to
failure. Instead, ideas come from a variety of sources. Skerryvore is a particularly interesting one as it came from
a manager pitching their new Emerging Markets team to us. Being curious types, it made us wonder “I wonder
where the old team went?”. After digging around, we found that they had set up Skerryvore.
The Lead Portfolio Manager, Glen Finegan, had over 20 years’ experience investing in Emerging Markets and had
been joined by his team, most of whom had worked with him for a decade or more. Using our industry networks,
we were able to reference the key people with their ex-colleagues as well as some large institutional clients that
had previously been invested with Glen. The feedback on the integrity of the people and the consistency of their
approach was impeccable.
This led us to do our own in-depth assessment of the 昀椀rm, team and process over a number of face-to-face
meetings. We were also able to assess Glen’s track record from a variety of funds he had managed previously as
well as review their portfolio holdings. Everything stacked up and there was clear evidence that they had been
disciplined in their approach.
The process is described as being “absolute-return” focused, selecting only the highest quality businesses with
pricing power and a sustainable advantage. An assessment of management quality is critical, only investing with
those with lengthy track-records of strong governance, alignment and integrity. This is to ensure the fruits of
these businesses come to shareholders and are not siphoned off elsewhere. Nowhere is this assessment more
critical than within Emerging Markets and is a key reason why the manager holds very little exposure in China.
When such quality focused strategies are employed diligently, you typically see performance streams that capture
some of the upside in strongly positive markets but, when markets are more volatile, the quality nature of their
portfolio means they suffer less. When combined this leads to market beating results over time. As you can see
from the chart below, this is exactly what we have observed in Skerryvore’s results since they launched their own
fund, steadily rising in the post Covid rebound and being more stable in the more volatile markets post 2021. This
pattern is consistent with their record at previous 昀椀rms.
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