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 – Jakarta
– While social and religious tensions continue to run high in Indonesia, the country is making necessary investments in prudently financed infrastructure projects. View the field notes.