Portfolio manager, Andrew Graham, provides an introduction to Martin Currie Asia Unconstrained Trust.
Our investment philosophy
The Martin Currie Asia Unconstrained Trust aim's to invest in businesses that are able to grow with the region, and which, more importantly, can translate that growth into good returns for shareholders.
To do this the company focuses less on market growth and more on companies with a franchise that can genuinely grow value. This is measured growth by free cashflow available to shareholders and earnings retained by the businesses.
The company seeks to buy these businesses at a reasonable price, based on an in-depth assessment of their longterm potential. These opportunities are scarce and when the manager finds one, they aim to make a long-term capital commitment. This enables the company to minimise transaction costs and compound returns.
As illustrated in the following diagram, the investment process can be broken down into three components:
Idea generation - the assessment of a business's long-term cash generating ability
In-depth evaluation - the manager conducts extensive due diligence using forensic accounting, a careful and detailed analysis of at least five years of a firm's annual reports. This is combined with a thorough assessment of the company's approach to corporate governance
Risk-aware portfolio construction - the investment process seeks to generate a series of high-return businesses at attractive valuations which aim to grow as the region does. For the portfolio, the manager selects the 20–30 most attractive opportunities. Risk is managed through deep fundamental understanding of the businesses in which the company invests.
On 11 July 2014 the mandate changed from benchmark relative Asia Pacific including Japan to an unconstrained Asia ex Japan strategy.