Strategic approach to boost value creation
In the dynamic world of investing, two strategies stand out: Growth and Value. Let's delve into the unique approach of the Seilern World Growth Fund, a global equity fund that focuses on capital growth through investing in companies with strong growth potential.
The Seilern World Growth Fund, managed by Peter Seilern-Aspang, is a growth-oriented, fundamental research-driven equity fund. It seeks to invest in companies undergoing positive change and growth acceleration, often found in sectors and firms undergoing structural transformation and innovation.
In contrast to traditional Value Investing, the Seilern World Growth Fund's primary objective is capital growth through investing in growth companies, many with evolving business models and structural improvements. While Value Investing focuses on identifying securities that appear undervalued relative to their intrinsic worth, the Seilern World Growth Fund concentrates on companies with strong growth potential.
| Aspect | Seilern World Growth Fund | Value Investing | |------------------------|--------------------------------------------|-----------------------------------------| | Primary Objective | Capital growth through investing in growth companies | Buying undervalued stocks with margin of safety and price below intrinsic value | | Investment Focus | Companies with strong growth potential, innovation, and improving profitability | Companies currently undervalued or distressed but fundamentally sound | | Research Approach | Fundamental, bottom-up with emphasis on transparency and evolving business models | Fundamental, seeking valuation anomalies and cyclical recovery | | Typical Holdings | Growth sectors like technology and evolving industries | More established or cyclical companies overlooked by growth investors |
The Seilern World Growth Fund's strategy is evident in its holdings, which often include growth sectors like technology and evolving industries. For example, Autodesk, a company that has seen a transformation in its business model, is one such holding.
The fund's performance reflects the cyclicality of growth strategies, with returns varying across years. Despite this, the Seilern World Growth Fund has shown impressive returns over the past decade, with an average annual increase of 18% and a total gain of 427% as of July 10, 2021.
Meanwhile, the Value approach, developed by Benjamin Graham and described in his 1949 book "The Intelligent Investor," focuses on finding relatively undervalued companies. A notable proponent of this strategy is Warren Buffett, the stock market guru.
On the other hand, the Seilern Global Trust A, a balanced fund, has tripled its value over the past ten years.
It's important to note that the Growth strategy, characterized by high valuations and strong buyer interest, has historically underperformed Value stocks in the long term. However, since the end of the financial crisis, Growth stocks and corresponding funds have performed significantly better.
Prominent examples of Growth stocks include Amazon, Apple, and Microsoft. Another US company, Idexx Laboratories, specializing in pet, livestock, and poultry products, has seen a 600% increase in value. Ansys, a US software provider, has achieved a 280% increase in value.
Peter Seilern-Aspang's book, "The Best Stocks in the World," states that higher returns do not necessarily require higher risk. This sentiment aligns with the Seilern World Growth Fund's approach, which emphasizes companies with improving profitability and growth trajectories, rather than rapid growth at any cost.
In conclusion, the Seilern World Growth Fund offers a unique approach to equity investing, focusing on companies undergoing positive change and growth acceleration. This contrasts with traditional value investing’s focus on buying undervalued, stable companies for a margin of safety. As always, investors should carefully consider their risk tolerance and investment goals when choosing a fund.
The Seilern World Growth Fund focuses on investing in businesses undergoing growth acceleration, a departure from traditional finance practices that favor value investing, which focuses on securities undervalued relative to their intrinsic worth. Unlike value investing, the growth fund concentrates on companies with strong potential for expansion, often found in innovative or transforming industries.
Investors should be aware that the growth strategy, with its focus on companies with improving profitability and growth trajectories, does not necessarily equate to higher risk, as suggested by Peter Seilern-Aspang's book "The Best Stocks in the World." This growth-oriented approach contrasts with the conventional value investing strategy described by Benjamin Graham in his book "The Intelligent Investor."
