Each year at our Annual Review meetings with our clients, we are telling them about a different fund manager and how they work. The goal with this project is to illustrate the different methods, processes and styles of the fund managers. In 2023 we profiled the Pathfinder Global Responsibility Fund, which is a top down, data driven, desk based fund.
This year, we profiled Stewart Investors, which are about as opposite in methodology to Pathfinder as you can get. While Pathfinder don’t meet with companies in their Global Responsibility Fund, and buy in external research, Stewart does the opposite.
Stewart Investors are headquartered in Sydney, Australia and are part of the First Sentier group of companies, who are a B-Corp, which are then in turn owned by Mitsubishi Financial Services. Stewart also have team members in offices in Singapore, London and New York.
The team at Stewart is small – and they have made it clear that if they need to get much bigger than about 15 people, they will look at spinning themselves out into a smaller organization, as they focus on people and ideas, and consider that a large team can’t bring that vibe. They have previously spun themselves out when the team and organization got too big.
Stewart focus on ‘people’. Investing in people in their team (they prefer to recruit arts and humanities graduates as compared to business and finance graduates) and investing in the people on company boards and executive teams.
Stewart spend a lot of their time visiting companies around the world. They have a particular focus on Asia, with strong relationships with many companies throughout Asia. Stewart don’t start with a ‘universe’ and whittle it down. They instead focus on companies, and look at other companies doing things well in a sector where they already have a good investment and their suppliers and their customers.
Investing in people means that they are focusing on the honesty and integrity and ethics of the people that they invest in. When we asked how you can identify those things, they outlined a disciplined process, revolving around understanding the history of the company, what worked, what didn’t and understanding how the board and executive reacted to and consider those events.
While Stewart don’t ‘buy in’ research, they do a lot of analysis in-house, but they also commission research. Their last major project was looking at Plastic Pollution in India. They commissioned an NGO to do a research project and then founded and funded an industry body to deal with the issue in India. Using their relationships, they got many companies in India (huge, big and smaller) to join the industry body and start dealing with the issue of plastic pollution – through out the manufacturing and distribution process and also with after sales pollution issues, incorporating the circular economy concept.
Stewart and Pathfinder have almost opposite approaches to their methodology and both approaches work well for them. We aim to have a range of methodology and styles in our portfolios, believing that different approaches will focus on different companies, providing strong returns.
