Seafarer®

Pursuing Lasting Progress in Emerging Markets®

Seafarer Overseas Growth and Income Fund

Overview

Investment Objective

The Fund seeks to provide long-term capital appreciation along with some current income; it also seeks to mitigate adverse volatility in returns.

Strategy

The Fund invests primarily in the securities of companies located in developing countries. The Fund invests in several asset classes including dividend-paying common stocks, preferred stocks, and fixed-income securities.

The Fund seeks to offer investors a relatively stable means of participating in developing countries’ growth prospects, while attempting to mitigate adverse volatility in returns. 

Portfolio Components

The Fund utilizes bottom-up security selection to construct a portfolio that offers a broad balance between prospective growth and current cash flow, the latter manifest to shareholders in a current dividend yield. When balancing the tradeoff between growth and income, the Fund seeks a wide range of securities across three portfolio components, as defined below.

Core Holdings Moderately underappreciated growth Typically moderately elevated current yield
Selected Growth Holdings Higher growth potential Typically lower current yield; sometimes no yield (dividend policy not yet established)
Value Holdings Lower growth potential Typically higher current yield; sometimes no yield (dividends canceled under financial stress)

Fund Characteristics

Inception Date
Net Assets
Active Share vs Index
Portfolio Turnover
12-month period ended
12-month period ended
Distribution Frequency
Status SIGIX is open; SFGIX is closed to most new investors
Benchmarks
Morningstar Emerging Markets Net Return USD Index
MSCI Emerging Markets Total Return USD Index

Portfolio Management

Andrew Foster Lead Manager
Paul Espinosa Lead Manager
Kate Jaquet Co-Manager

Ownership of Fund Securities

Share Classes

Investor Institutional
Ticker SFGIX SIGIX
CUSIP
NAV
30-Day SEC Yield
Fund Distribution Yield
Gross Expense Ratio1
Load
12b-1 Fee
Minimum Initial Investment – Regular Account
Minimum Initial Investment – Automatic Investment Plan2
Minimum Initial Investment – Retirement Account
Minimum Subsequent Investment

Underlying Portfolio Holdings

Holdings3
Unique Corporate Issuers4
% of Net Assets in Top 10 Holdings
Weighted Average Market Cap
Market Cap of Portfolio Median Dollar
Gross Portfolio Yield5
Price / Book Value5
Price / Earnings56
Earnings Per Share Growth56
   
The performance data quoted represents past performance and does not guarantee future results. Future returns may be lower or higher. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. View the Fund’s most recent month-end performance.

Geographic Focus

Developing countries and territories including, but not limited to:

Africa Botswana, Ghana, Kenya, Mauritius, Morocco, Nigeria, Tunisia, South Africa, Zimbabwe
East and South Asia Bangladesh, China, India, Indonesia, Malaysia, Pakistan, Philippines, South Korea, Sri Lanka, Taiwan, Thailand, Vietnam
Emerging Europe Bosnia and Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Georgia, Greece, Hungary, Lithuania, Kazakhstan, Poland, Romania, Russia, Serbia, Slovenia, Turkey, Ukraine
Latin America Argentina, Brazil, Chile, Colombia, Jamaica, Mexico, Peru, Trinidad and Tobago
Middle East Bahrain, Egypt, Jordan, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia, United Arab Emirates

Select developed countries and territories with significant economic and financial linkages to developing countries, including, but not limited to, Australia, Hong Kong, Ireland, Israel, Japan, New Zealand, Singapore, and the United Kingdom.

Sources: ALPS Fund Services, Inc., Bloomberg, Seafarer.
Portfolio holdings are subject to change.
  1. Seafarer Capital Partners, LLC has agreed contractually to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waiver / Expense Reimbursements (inclusive of acquired fund fees and expenses, and exclusive of brokerage expenses, interest expenses, taxes and extraordinary expenses) to 1.15% and 1.05% of the Fund’s average daily net assets for the Investor and Institutional share classes, respectively. This agreement shall continue at least through August 31, 2022.
  2. Shareholders who sign up for an Automatic Investment Plan can request a waiver of the Institutional Class investment minimum. View the waiver program criteria.
  3. Excludes short-term government bonds; includes medium- and long-term government bonds.
  4. Excludes all government bonds.
  5. Calculated as a harmonic average of the underlying portfolio holdings.
  6. Based on consensus earnings estimates for next year. Excludes securities for which consensus earnings estimates are not available.

Performance

Total Returns

As of (Prior Month)

NAV / Index Level () Annualized Cumulative Inception Date Net Expense Ratio1 Gross Expense Ratio1
YTD 1 Mo 3 Mo 1 Yr 3 Yr 5 Yr 7 Yr Since Inception Since Inception

As of (Prior Quarter)

NAV / Index Level () Annualized Cumulative Inception Date Net Expense Ratio1 Gross Expense Ratio1
YTD 1 Mo 3 Mo 1 Yr 3 Yr 5 Yr 7 Yr Since Inception Since Inception
Growth of a $10,000 Investment Since Inception
The rates of return are hypothetical and do not represent the returns of any particular investment.
Fund performance is presented in U.S. dollar terms, with U.S. jurisdiction distributions reinvested on a gross (pre-tax) basis. For the Morningstar index, performance is calculated to reflect the reinvestment of dividends, capital gains, and other corporate actions net of foreign jurisdiction withholding taxes. For the MSCI index, performance is calculated to reflect the reinvestment of dividends, capital gains, and other corporate actions gross of foreign jurisdiction withholding taxes (i.e., such taxes are ignored). The performance data quoted represents past performance and does not guarantee future results. Future returns may be lower or higher. The investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than the original cost.
Source: ALPS Fund Services, Inc.

Return Characteristics as of

Relative to the Morningstar Emerging Markets Net Return USD Index except where noted.

3 years Since Inception2
Alpha
Beta
R-squared
R-squared vs. S&P 500 Index
Upside Capture Ratio
Downside Capture Ratio
Source: Morningstar.
  1. Seafarer Capital Partners, LLC has agreed contractually to waive and/or reimburse fees or expenses in order to limit Total Annual Fund Operating Expenses After Fee Waiver / Expense Reimbursements (inclusive of acquired fund fees and expenses, and exclusive of brokerage expenses, interest expenses, taxes and extraordinary expenses) to 1.15% and 1.05% of the Fund’s average daily net assets for the Investor and Institutional share classes, respectively. This agreement shall continue at least through August 31, 2022.
  2. As of 3/1/12.  The Fund’s inception date is 2/15/12 but Morningstar data is only available as of the beginning of the following month.
The Seafarer Overseas Growth and Income Fund is not sponsored, endorsed, sold, or promoted by Morningstar, Inc. Morningstar, Inc. makes no representation or warranty, express or implied, to the shareholders of the Fund or any member of the public regarding the advisability of investing in the Fund or the ability of the Morningstar Emerging Markets Net Return U.S. Dollar Index to track general equity market performance of emerging markets.

Composition

Top 10 Holdings as of

Holding Sector Country Portfolio Component1 Issuer Mkt Cap ($B) Yield2 Price/ Book Price/ Earnings3 EPS Growth3
Portfolio holdings are subject to change.
Sources: ALPS Fund Services, Inc., Bloomberg, Seafarer.

View all Holdings

Portfolio Composition by Region as of

All Holdings ADRs, Common & Preferred Equities Only
% Net Assets Price / Earnings67 EPS Growth67
Region # of Holdings4 Fund +/− vs. Index Avg Mkt Cap ($B) Gross Yield6 Price / Book6 Prior Year This Year Next Year This Year Next Year
Sources: ALPS Fund Services, Inc., Bloomberg, Seafarer.

Portfolio Composition by Sector as of

All Holdings ADRs, Common & Preferred Equities Only
% Net Assets Price / Earnings67 EPS Growth67
Sector # of Holdings4 Fund +/− vs. Index Avg Mkt Cap ($B) Gross Yield6 Price / Book6 Prior Year This Year Next Year This Year Next Year
Sources: ALPS Fund Services, Inc., Bloomberg, Seafarer.
30-Day SEC Yield: SFGIX ; SIGIX ()
The performance data quoted represents past performance and does not guarantee future results. Future returns may be lower or higher. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. View the Fund’s most recent month-end performance.

Portfolio Composition by Component as of

Portfolio Component1 % Net Assets
Source: Seafarer.

Portfolio Composition by Asset Class as of

Asset Class % Net Assets
Source: ALPS Fund Services, Inc.

Portfolio Composition by Market Capitalization as of

Market Capitalization % Net Assets +/− vs. Index
Sources: ALPS Fund Services, Inc., Seafarer.
Due to rounding, percentage values may not sum to 100%. Values less than 0.5% may be rounded to 0%.
  1. Core Holdings: moderately underappreciated growth; typically moderately elevated current yield. Growth Holdings: higher growth potential; typically lower current yield; sometimes no yield (dividend policy not yet established). Value Holdings: lower growth potential; typically higher current yield; sometimes no yield (dividends canceled under financial stress).
  2. Yield = dividend yield for common and preferred stocks and yield to maturity for bonds.
  3. Based on consensus earnings estimates for next year.
  4. Excludes short-term government bonds; includes medium- and long-term government bonds.
  5. Excludes all government bonds.
  6. Calculated as a harmonic average of the underlying portfolio holdings.
  7. Based on consensus earnings estimates. Excludes securities for which consensus earnings estimates are not available.

Distributions

For More Information

Individual Investors

(855) 732-9220 (Mon–Fri 9am–8pm ET)
seafarerfunds@alpsinc.com

Investment Professionals

(415) 578-5809 (Mon–Fri 9am–8pm ET)
clientservices@seafarerfunds.com

Year-end 2021 Distribution Estimates

Please note that these estimates are subject to change.1

Record Date Ex, Pay and Reinvest Date Ordinary Income Short Term Capital Gains Long Term Capital Gains Total Distrib. Per Share
SFGIX (Investor Class) 12/8/21 12/9/21 $0.067 $0.000 $0.871 $0.937
SIGIX (Institutional Class) 12/8/21 12/9/21 $0.074 $0.000 $0.871 $0.945

Actual distribution amounts will be available on this page on or after the ex-date.

All shareholders of record on December 8, 2021 will receive the year-end distribution. On December 9, 2021 the share price of the Fund will be reduced by the amount of the distribution (net of any market performance), and the distribution will either be paid or reinvested as of market close (per the shareholder’s previously established account settings).

The estimates shown above should not be used in the computation of federal or state income taxes.

  1. Estimates are based on Fund shares outstanding as of November 12, 2021.

2021 Distribution Dates

Distribution frequency: Semi-annual

Please note: future dates are subject to change.

Record Date Ex, Pay and Reinvest Date
Mid-year Distribution 6/23/21 6/24/21
Year-end Distribution 12/8/21 12/9/21

To be notified of distribution estimates, sign up for Seafarer email updates.

Historical Distributions

Ex, Pay and Reinvest Date Reinvest NAV Ordinary Income Short Term Capital Gains Long Term Capital Gains Total Distrib. Per Share Cumulative Distrib. Per Share Since Inception
SFGIX (Investor Class)
SIGIX (Institutional Class)

For more information on the Fund’s distribution policies, please see the “Dividends and Distributions” section of the Prospectus.

Foreign Source Income

The Seafarer Overseas Growth and Income Fund has elected to pass through to shareholders the foreign taxes paid on income earned from foreign investments. These foreign taxes are reported in Box 7 of Form 1099-DIV. As a shareholder in the Fund, you may be able to claim a tax credit or an itemized deduction on your federal tax return for the amount of taxes paid to foreign countries. Please consult your tax adviser.

Year Foreign Source Income (as a % of Box 1a on Form 1099-DIV)
Past performance is no guarantee of future results. There is no guarantee that the Fund will pay or continue to pay distributions.

Portfolio Review

Seafarer Overseas Growth and Income Fund

Portfolio ReviewThird Quarter 2021

During the third quarter of 2021, the Seafarer Overseas Growth and Income Fund returned -7.98%.12 The Fund’s benchmark indices, the Morningstar Emerging Markets Net Return USD Index and the MSCI Emerging Markets Total Return USD Index, returned -7.23% and -7.97%, respectively. By way of broader comparison, the S&P 500 Index returned 0.58%.

The Fund began the quarter with a net asset value of $15.67 per share. It paid no distributions during the quarter and finished the period with a value of $14.42 per share.3

Performance

The quarter was a miserable one for both the Growth and Income Fund and the benchmark indexes, albeit for altogether different reasons.

Chinese stocks collapsed during the quarter as the Xi administration enacted major policy interventions across a swathe of industries in a bid to reshape Chinese society according to cherished political objectives. Pundits, caught off guard, sought to describe the interventions as little more than the ordinary activity of a “regulatory cycle.” They advised not to think ill of the administration’s intent – and they assured that any unwelcome effects would recede, as authorities would surely ease off in a predictable manner in the event of unwanted economic damage.

What a gross and costly mischaracterization of events! The policy interventions during the quarter bore no semblance to regulation, which is typically the domain of a deliberative rulemaking body, authorized to enact practical governance in accordance with the intent of written law. Rather, the interventions by executive fiat were sweeping and capricious, rewriting the fortunes of selected industries and individual companies overnight. Further, there’s been no respite yet, as supposed: the “regulatory” environment in China remains precarious, responsive only to the opaque impulses of the Xi administration.

Amid this volatile environment, the Morningstar China Net Return USD Index fell -17.53% during the third quarter; and as the Morningstar Emerging Markets Index4 allocated 35% to China at the outset of the quarter, Chinese shares were particularly responsible for the benchmark’s retreat.5

During the height of the retreat in Chinese shares, the Fund initially performed well on relative basis, declining only marginally at the outset of the policy interventions. For several years now, Seafarer has been wary of the policy environment in China: while we are not “macro” analysts, we have observed increasing and problematic intervention by the state in corporate affairs, manifest throughout many industries within the economy. As such, the Fund has been wary of its exposure to Chinese stocks, with less exposure than the Morningstar benchmark, and little direct exposure to this so-called “regulatory cycle.”

However, the Fund was not spared during the quarter. During September, the Fund suffered a rout in its holdings in South Korea – the dominant country exposure of the portfolio – and the Fund finished the quarter with a result no better than its benchmarks. At this time, it is unclear why South Korean stocks collapsed in the final month of the quarter. Possible causes include investors’ fear of rate increases (at the end of August, the South Korean central bank raised its policy rate by 0.75%, ahead of the U.S. Federal Reserve), or incipient component and supply shortages that might weigh on future profits. Yet the stock market’s movement seems an overreaction, as neither inflation nor shortages have yet posed material problems for the Fund’s Korean positions.

Allocation

During the quarter, the Fund took advantage of the decline in Chinese and South Korean stock prices, accumulating marginal shares in some of its existing holdings, with a notable emphasis on Jiangsu Hengrui (one of China’s largest and most innovative chemical pharmaceutical companies). Hengrui’s shares ostensibly declined not so much due to the aforementioned policy interventions, but rather because one of its key anti-cancer therapies had undergone a scheduled price renegotiation. Some investors, apparently fearing the worst, sold the shares in anticipation of lower profits. We remain confident that Hengrui has sufficient cost control to substantially blunt the impact of renegotiated prices; and we remain optimistic that Hengrui’s therapeutical offerings will eventually advance in clinical trials in the U.S. and elsewhere, in which case Hengrui might be one of the first Chinese pharmaceutical firms to expand globally.

The Fund established a new position in Dairy Farm International Holdings, a well-established owner and operator of supermarket and drugstore chains throughout South and East Asia. The company stands out for its substantive dividend policy and its ability to generate profits even amid turbulent economic conditions. Dairy Farm is controlled by Jardine Matheson, a diversified holding company whose shares were also recently acquired by the Fund.

Outlook

China underwent a dramatic series of events during the quarter that resulted in a broad-based retreat in stocks. Importantly, though, not all stocks fell during the period: as noted in the Fund’s final portfolio review of 2020, there are latent bubbles in corners of China’s stock markets, yet to be popped. Some select pockets of stocks barely budged, and still lay claim to outrageous valuations. However, the silver lining of the damage done during the quarter is that many shares in China are now priced more reasonably; a meaningful portion of the bubble we noted has been pricked. Many stocks (if not all) have valuations that at last seem to acknowledge some risk of policy intervention – a risk that has long been apparent to us, but which has been mostly ignored by other market participants until recently.

Nonetheless, the events of the quarter highlighted the mounting risk that China’s economy might experience a structural deceleration; the economy could grow substantially slower than its potential, and sharply slower than prevalent macroeconomic forecasts. In our view, that risk has yet to be priced appropriately among most China stocks. Still, and contrary to some of the most extreme views circulated, we believe that China remains “investable,” albeit only very selectively – as has always been the case. Among all the countries in the developing world, China remains uniquely qualified to produce more competitive companies capable of succeeding globally – and as long as China remains capable of producing such companies, the Fund will seek to discover and invest in them.

China is by no means the largest bubble in the emerging markets: that dubious distinction now belongs to India’s markets, which surged seemingly without basis during the quarter. Certainly, investors appear excited that India has apparently overcome the worst impacts of the pandemic, and that growth continues due to exceptionally loose monetary policy. However, it seems to us that Indian shares have benefitted from a large influx of capital from foreign portfolio managers – managers singed by events in China, desperate to put capital to work in countries still deemed to be “growth” markets. In response, stocks have risen to precarious heights, and we struggle to find individual stocks that provide acceptable prospective returns relative to their risk. Time will only tell if the great “short China / long India” trade of 2021 will prove durably fruitful.

Thank you for entrusting us with your capital. We are honored to serve as your investment adviser in the emerging markets.

Andrew Foster,
Paul Espinosa,
The performance data quoted represents past performance and does not guarantee future results. Future returns may be lower or higher. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. View the Fund’s most recent month-end performance.
The views and information discussed in this commentary are as of the date of publication, are subject to change, and may not reflect Seafarer’s current views. The views expressed represent an assessment of market conditions at a specific point in time, are opinions only and should not be relied upon as investment advice regarding a particular investment or markets in general. Such information does not constitute a recommendation to buy or sell specific securities or investment vehicles. It should not be assumed that any investment will be profitable or will equal the performance of the portfolios or any securities or any sectors mentioned herein. The subject matter contained herein has been derived from several sources believed to be reliable and accurate at the time of compilation. Seafarer does not accept any liability for losses either direct or consequential caused by the use of this information.
As of September 30, 2021, Jiangsu Hengrui Medicine Co., Ltd. comprised 2.9% of the Seafarer Overseas Growth and Income Fund, Dairy Farm International Holdings Ltd. comprised 1.4% of the Fund, and Jardine Matheson Holdings, Ltd. comprised 2.3% of the Fund. View the Fund’s Top 10 Holdings. Holdings are subject to change.
The Seafarer Overseas Growth and Income Fund is not sponsored, endorsed, sold, or promoted by Morningstar, Inc. Morningstar, Inc. makes no representation or warranty, express or implied, to the shareholders of the Fund or any member of the public regarding the advisability of investing in the Fund or the ability of the Morningstar Emerging Markets Net Return U.S. Dollar Index to track general equity market performance of emerging markets.
  1. References to the “Fund” pertain to the Fund’s Institutional share class (ticker: SIGIX). The Investor share class (ticker: SFGIX) returned -7.95% during the quarter.
  2. The performance data quoted represents past performance and does not guarantee future results. Future returns may be lower or higher. The investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than the original cost. View the Fund’s most recent month-end performance.
  3. The Fund’s Investor share class began the quarter with a net asset value of $15.59 per share; it finished the quarter with a value of $14.35 per share.
  4. Morningstar Emerging Markets Price Return USD Index.
  5. Source: Bloomberg.