Seafarer Overseas Growth and Income Fund Portfolio Review – Second Quarter 2017
July 2017 – In his portfolio review for the Growth and Income Fund, Andrew Foster discusses the benchmark’s extensive holdings in the Chinese internet sector, and how those holdings have fueled the index’s recent gains. Next, he cites four reasons why he has chosen to omit Chinese internet stocks from the Fund, despite their superficial appeal. Andrew also compares the relative merits of the Fund’s largest holding (Infosys) against the benchmark’s largest holding (Tencent). From there, he reviews Richter Gedeon, a new holding in the Fund. Andrew closes by reflecting on the nature of the earnings recovery now underway in developing markets, noting that while it is broad-based by sector, it is a “two-speed” recovery that has so far favored large companies over small ones.
Seafarer Overseas Value Fund Portfolio Review – Second Quarter 2017
July 2017 – In his portfolio review for the Value Fund, Paul Espinosa discusses how the holdings that led performance for the Fund in the quarter were distinct from those that drove the MSCI Emerging Markets Index. He highlights two instances of value realization within the portfolio’s holdings, and describes his thought process concerning a portfolio holding impacted by geopolitical risk. He concludes by reflecting on the unusual confluence of three key events during the quarter and the resulting implications for the future of emerging markets.
Letter to Shareholders – Annual Report
May 2017 – In the Annual Report letter, Andrew Foster notes the Growth and Income Fund’s reduction in operating expenses, consistent with Seafarer’s long-term goals. Next, he discusses Seafarer’s policy on corporate governance. The policy emphasizes the use of objective data to measure each company’s impact on society and nature, and it requires that Seafarer assess the consequences for valuation and growth. Andrew explains how the policy favors engagement over divestment: Seafarer believes that acting as a responsible steward of capital means encouraging companies to enhance their standards and practices. Lastly, he declares that the policy is not a marketing gimmick, but rather an intrinsic element of the firm’s philosophy and process.
Field Notes – São Paulo
– Even under the challenging business environment in Brazil, some local companies have executed their business plans consistently with their long-term strategic views. View the field notes.
News and Commentary
Seafarer Overseas Growth and Income Fund Portfolio Briefing – Second Quarter 2017
– Daniel Duncan and Andrew Foster discuss the gains in the Growth and Income Fund and index during the quarter, including the impact of the Chinese internet sector. Andrew addresses several false narratives about emerging market currencies and earnings growth. He notes that a broad-based recovery in earnings growth is underway, benefitting most sectors – but it appears to be a “two-speed” recovery, one which so far favors larger companies over smaller ones. Andrew concludes by noting that expectations for growth have become ebullient, and may overstate reality. View the video.
Seafarer Overseas Value Fund Portfolio Briefing – Second Quarter 2017
– Daniel Duncan and Paul Espinosa discuss two Value Fund holdings that realized value in the second quarter: a packaging company in China and a cooling services company in the United Arab Emirates. Paul illustrates how geopolitical risk affects company analysis with a Fund holding in Qatar. Lastly, he describes a new Fund holding in China. View the video.
Seafarer Overseas Value Fund Marketwatch – Here’s a Different Approach to Investing in EM: Value
– In an interview with Marketwatch, Paul Espinosa explains his view that emerging markets are a more fertile ground for finding value than developed markets. View the article.