Investment strategy and characteristics - SKAGEN Kon-Tiki
SKAGEN Kon-Tiki is a long-only equity fund which seeks to generate long-term capital growth through investments in carefully selected companies which are listed in, or have significant exposure to, emerging markets. The fund is managed by Cathrine Gether and Fredrik Bjelland.
SKAGEN Kon-Tiki invests on the basis that emerging markets will be the most important driver of global economic growth for years to come. Many investors see the developing world as evolving into an increasingly dynamic and diversified market place; a view shared by our portfolio managers who believe that careful stock picking is the key determinant of investment success. There are inherent traits and inefficiencies in emerging markets that can be exploited by selecting the companies most likely to generate superior returns.
SKAGEN Kon-Tiki has a broad mandate and investment decisions are based on company fundamentals, rather than targeting sector or geographic exposure. At least 50 percent of its assets are invested in companies listed in emerging markets; this proportion has historically been around 70-80 percent but it may fluctuate significantly over time depending on where the best value opportunities are identified. The portfolio managers, who are supported by two dedicated analysts, believe that where a company operates or generates revenue is more important than where it is listed and considerable time is spent understanding the drivers of a company’s current and future earnings.
SKAGEN Kon-Tiki’s investment approach is benchmark agnostic which gives the portfolio managers maximum flexibility to invest with conviction in the best emerging market value opportunities and optimise the fund’s risk-adjusted returns.
SKAGEN Kon-Tiki’s investments have historically been in small / mid cap companies, combined with select high-conviction large cap ideas. Portfolio companies typically have a robust business model where the long-term value creation potential is not currently reflected in its share price and where there are clear catalysts for revaluation. The portfolio managers also look for companies with a proactive attitude towards their return on equity which look beyond seeking to accumulate book value.
The portfolio typically consists of 40-70 companies with the top 35 representing 80-95 percent of assets and each holding targeted to be a minimum one percent of the fund. The portfolio managers have a long-term perspective on value creation and the fund’s average holding period has historically been over three years. They focus on absolute return opportunities and expect new positions to have at least 40% upside over a two-year investment horizon.