Global Focused Growth: Uncovering Compelling Insights To Invest In Change
Dave Eiswert discusses the framework that defines his investment approach, which leverages the expertise and best ideas of T. Rowe Price’s extensive global research platform to uncover insights about businesses that are improving over time.
I've been with T. Rowe for about 13 years. I started as an analyst covering technology companies. I moved my way into running our Global Technology sector for four years, and then ultimately was assigned to run the Global Focused Growth strategy.
Describe T. Rowe Price’s Investment Strategy and Philosophy
So the Global Focused Growth is a strategy that puts together two key elements. One is an opportunity set, so we have the whole world to look at. Whether it's the US or Europe or emerging markets, Japan, we're looking everywhere around the world for the best ideas.
The second element of it is the choices we make for our clients, so we take advantage of this great opportunity set and make difficult choices to deliver a somewhat concentrated portfolio, so we think it's difficult choices, great ideas, and that puts together a very solid growth offering.
What Is Your Investment Process?
There are three key parts of the process. First is the platform, so T. Rowe Price has a great research platform, people all over the world on the ground understanding companies having deep relationships with companies. That's the most critical part of our competitive advantage, is the scale, the breadth, the quality of our platform.
Secondly is our framework, so how do we make the hard choices that we have to make for our clients, what is the framework around picking stocks, and we really focus on insights around how businesses are changing. So we use our platform, we use our framework, and finally we have an investment team that works with me to engage the platform to find the best ideas, so when we find those great ideas we make big bets that deliver alpha for our clients.
How Do You Manage Risk?
There are really two ways we think about risk. First it's a very simple process, but it -- basically we ask ourselves how much money can we lose? We never want our clients to suffer from too much risk in too big a position in the portfolio, so we analyse a stock that we own in terms of what's the downside risk and how does that limit how big the position could be in the portfolio..
Now, if the risk is too great we won't own something, but if we have a position where we have a stock that has tremendous upside but we could lose a lot of money, we'll size the position so that we never hurt the overall portfolio.
Secondly, we use quantitative analysis. We have a very sophisticated team at T. Rowe that can analyse our portfolio, that can point out where we're taking risks that maybe we won't see on the surface, and so we use that very regularly to understand how does the whole portfolio function in a risky world.
Why invest in t. Rowe price global focused growth equity strategy?
I think there are two ways to look at our product for an investor, an institution to think about.
First is just as a portfolio that represents the best thinking of T. Rowe Price. So you can own a portfolio that has, you know, a very large opportunity set, a disciplined framework, an experienced team, and that can be your growth vehicle.
Secondly, you can think about it as being a supplement to your portfolio, so if you bring together a number of different kinds of managers or different portfolio schemes or structures in terms of how you invest your overall portfolio you can add our portfolio as a satellite of alpha, right, that brings these best ideas from T. Rowe, and you combine it with the current portfolio you have.
I mean, fundamentally we're about growth and change, being on the right side of change. So, you know, we're a somewhat risky portfolio from that sense, but put together in the right package it can be very complementary to an existing portfolio.
Give two examples of stock performance that you found to be a stand out
You know, we look to leverage the platform to find insights about businesses that are improving over time. That's our focus, and a couple of great examples of names we've owned in the past couple of years that have been good stocks, one is CME, which is the Chicago Mercantile Exchange.
And really the insight around CME was the shift away from over-the-counter trading to futurisation, the capital discipline that the company implemented, and really the globalisation of CME's markets, and so our analyst identified that insight. We were able to make a big bet, and it's been a great stock for us.
Another example is Coach where you have a company that we think fundamentally long term will be a multi brand company. The company went through a lot of pain in resetting its core Coach brand, and after all that pain and investment it's actually emerging now as a very strong midmarket luxury brand with tremendous potential to grow internationally.
And the CEO, Victor Luis, is focusing on creating this multiband growth engine, so again our analyst had an insight about how Coach was changing and why it was being set up for strong growth, and so focusing on those insights, leveraging our platform, that's what really sets us apart.
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