‘We buy our best ideas’: how the Global Fund targets world-class companies
The fund also diversifies into different regions, sub-industries and geographies, paying particular attention to countries with a strong rule of law and wary of being too concentrated in those known to be prone to natural disasters.
Portfolio managers place no restrictions on sectors, but being more concentrated in one, for example, would clearly result in poor portfolio construction. However, it is important to ensure that the portfolio is agile enough to take advantage of unforeseen dislocations.
Chowdhury said: “How do I make sure I’m diversified enough around the world so that no matter, whether it’s interest rates or the economic crisis, I’m diversified enough? I’ve learned that our best buying ideas And it’s good to allocate capital to them. Plus, it’s important to have liquidity to sell your companies, which probably isn’t much relative to other names.”
As a bottom-up investor, opportunities present themselves on a daily basis rather than presenting with a more macro six-month outlook. For Choudhury, it’s about being prepared and ready to move fast.
The team does its work in advance. Of the approximately 35,000 global publicly listed companies, about 17,000 remain after you take into account liquidity and rule of law. It then looks at the top-10 percentile, analyzing the return on capital to see if it is high quality, recurring and stable.
