Articles and client letters from the St Andrews Partners team.
These articles are provided for information only and do not constitute and should not be construed as, investment advice or a recommendation to transact in any company, stock or sector mentioned.
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What do Argentina, Turkey and Italy have in common? Judged by their public debt as a percentage of GDP, not very much: the figures are 56%, 28% and 144% respectively. Yet in each case, the credibility of these countries’ promises, in the form of their currencies and outstanding bond obligations, was called into question this year.
‘Reality is far more vicious than Russian roulette. First, it delivers the fatal bullet rather infrequently…after a few dozen trials one forgets about the existence of a bullet, under a numbing false sense of security. Second, unlike a well-defined precise game, one does not observe the barrel of reality. One is thus capable of unwittingly playing Russian roulette - and calling it by some alternative ‘low risk’ name.’
In good times, many businesses appear to be resilient and good quality. Our investment process is focused on thinking about risks - we worry constantly about the downside risks to the businesses we invest clients’ money in.
Our conservatively positioned emerging markets funds are lagging a strongly rising market.
Returns of the benchmark index have been driven in large part by the performance of a number of technology sector companies. We would struggle to own many of these for clients for reasons of corporate governance: lack of management integrity, nebulous political connections, and overly complicated corporate structures, for instance.
As bottom-up stock pickers we often find it difficult to get a clear view on the world from 10,000 feet. We simply don’t find this perspective a very useful way of assessing risks to existing holdings or for finding new ideas, most likely because macro-economic considerations are usually reﬂected in asset prices.
This is our first letter to clients invested in the Stewart Investors Asia Pacific All Cap strategy. Along with our GEM, Worldwide, Latin America and Frontier funds, there is a shared investment philosophy and process, which will be familiar to many investors. We shall write an annual letter and hold an annual webcast for clients.