Message to Shareholders – Portfolio Manager Update
Effective August 31, 2022, Lydia So was named a Lead Portfolio Manager of the Seafarer Overseas Growth and Income Fund. She joins Andrew Foster and Paul Espinosa, who remain Lead Portfolio Managers of the Fund.
Message to ShareholdersPortfolio Review –
– Andrew Foster discusses how the Growth and Income Fund’s strategy of investing in companies with durable earnings growth is performing amid challenging global conditions. He notes that China’s financial distress requires particular attention by investors.
Portfolio ReviewPortfolio Review –
– Paul Espinosa explains that while global growth concerns weighed on some Value Fund holdings, the Fund also captured strong company-specific sources of return. He introduces a new Fund holding, Anheuser-Busch InBev.
Portfolio ReviewThe Balance Sheet Constraints on China’s Economic Stimulus
– As China faces major economic headwinds, Beijing’s attempts to stimulate growth are constrained by large contingent liabilities and a struggle for fiscal control with local governments.
The Balance Sheet Constraints on China’s Economic StimulusThe Diplomat – China’s Interventionist Approach to Managing Financial Risks
– In The Diplomat, Seafarer’s Nicholas Borst writes that China’s new approach to cleaning up the financial sector is likely to result in a more state-centric economy. : As of June 30, 2022, the Seafarer Funds did not own shares in the entities referenced in the article. View the Top 10 Holdings for the Growth and Income Fund and the Value Fund. Holdings are subject to change.
MorePortfolio Briefing –
– Andrew Foster reports that the Growth and Income Fund re‑entered Alibaba because the valuation was attractive relative to the company’s potential. He notes that the Fund remains active in China despite its slowing growth, because it offers a broad and deep universe of companies.
Portfolio BriefingPortfolio Briefing –
– Paul Espinosa explains that contributors to the Value Fund’s performance (such as Giordano) were driven by stock-specific factors, while detractors (such as Pacific Basin) fell due to global recession concerns. He also describes the type of performance the Fund seeks to provide over a full market cycle.
Portfolio BriefingPrevailing Winds
Learn MoreFixing China’s Broken Balance Sheets
– China’s approach to repairing weak balance sheets and preventing financial instability reflects lessons learned from past crises and the current priorities of Xi Jinping.
Fixing China’s Broken Balance SheetsHow Strong is China’s Household Balance Sheet?
– China’s household balance sheet is stronger than commonly thought, but it is still vulnerable to shifts in the real estate market.
How Strong is China’s Household Balance Sheet?China’s National Balance Sheet – A Framework for Analysis
– The risks of China’s economy and debt levels should be evaluated in the context of its national balance sheet – taking into account the interconnected assets and liabilities between households, corporations, financial institutions, and the government.
China’s National Balance Sheet – A Framework for AnalysisNews and Commentary
Letter to Shareholders
– To mark the tenth anniversary of the Seafarer Overseas Growth and Income Fund, Seafarer’s founders reflect on the Fund’s historical record and progress toward its investment objectives during a challenging decade for the emerging markets.
Letter to ShareholdersToday On Wall St. – Is Evergrande China’s Lehman Moment?
– In an interview with Today On Wall St., Seafarer’s Nicholas Borst explains why discussion of a “Lehman Moment” in China overlooks the fact that the country’s property sector is grappling with problems distinct from those the U.S. faced in 2008. : As of March 31, 2022, the Seafarer Funds did not own shares in the entities referenced in the video. View the Top 10 Holdings for the Growth and Income Fund and the Value Fund. Holdings are subject to change.
MoreMoney Life – Interview with Andrew Foster
– In an interview with Money Life’s Chuck Jaffe, Andrew Foster notes that emerging markets can offer a source of diversified growth within an investor’s portfolio – but given the volatility of the asset class, a long-term time horizon is essential. Listen
MoreThe Wire China – Understanding China’s Household Balance Sheet
– In The Wire China, Seafarer’s Nicholas Borst writes that China’s household balance sheet is stronger than commonly thought, but its strength depends on residential housing prices remaining high.
MoreCan Value Investing Work in Emerging Markets?
– Paul Espinosa reviews the evolution of the emerging markets asset class over the past 40 years. He notes that growth remains the dominant strategy employed by investors, leaving fertile ground for value investors to extract returns.
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