Strategy for boosting value and growth
In the world of investing, a balanced approach often yields the best results. This is the philosophy behind the Seilern World Growth Fund, a strategy that focuses on achieving growth by investing in high-quality, large, and successful companies with a proven track record and high predictability of future earnings growth.
Peter Seilern-Aspang, the fund's manager, advocates for this approach in his book, "The Best Stocks in the World". He asserts that it's not necessary to take on higher risk to achieve a higher return, nor is it necessary to be broadly diversified to create as much security as possible.
The value approach, developed by Benjamin Graham in 1949 and endorsed by Warren Buffett, focuses on finding relatively undervalued companies. However, the Seilern World Growth Fund strategy diverges from traditional value investing. Instead, it prioritizes quality and earnings predictability, targeting large, high-quality companies with consistent, predictable earnings growth.
This strategy differs from traditional growth investing as well. While growth stocks are characterized by high valuations and strong buyer interest, the Seilern World Growth Fund strategy emphasizes stability and proven track records, blending value and growth traits.
The fund's selective approach has proven successful. Over the last ten years, the Seilern World Growth Fund has increased by an average of 18% per year (total value increase: 427%, as of July 10, 2021). Notable gains have been seen in companies like Nike, which saw a gain of 180% over five years, Idexx Laboratories, with over 600% value growth, and US software provider Ansys, achieving a gain of over 280%.
The Seilern World Growth Fund concentrates on just 70 global companies when selecting stocks. Prominent examples of growth stocks included in the fund are Amazon, Apple, and Microsoft.
For those seeking a more balanced portfolio, Seilern Global Trust A, a mixed portfolio managed according to the same principles as the Seilern World Growth Fund, has tripled its value within ten years.
Historically, growth stocks have performed worse than value stocks, but they have outperformed since the end of the financial crisis. The Seilern World Growth Fund's strategy, which captures growth with a risk-conscious emphasis on quality and reliability, rather than just targeting cheap stocks or rapid growth without regard to company fundamentals, may offer a promising avenue for investors seeking stable returns.
In light of Peter Seilern-Aspang's book, "The Best Stocks in the World," he proposes a different investment strategy from traditional value investing, prioritizing quality and earnings predictability over undervalued companies. Interestingly, the Seilern World Growth Fund strategy also diverges from traditional growth investing by emphasizing stability and proven track records, blending value and growth traits.
