Pending approval from shareholders, the strategy will become the Brown Advisory Latin American fund on 30 April. Portfolio managers Rupert Brandt and Peter Cawston will join Brown Advisory’s investment team in London.
The fund has returned 3% over one year compared to 4.1% in the FO Equity – Latin America sector, according to FE. However, over a 10-year period it has significantly outperformed, delivering 104.5% compared to to the sector’s 15.7%.
Findlay Park founder James Findlay said the entire investment team at the boutique firm will now be focussed on the American fund, which accounts for 95% of the firm’s AUM and is currently closed to new money. The fund has returned 6.5% over one year compared to 1.6% in the FO Equity – North America sector, according to FE. Findlay Park told Portfolio Adviser it has no plans to re-open the American fund.
Tilney managing director Jason Hollands described the move as surprising given the Latin American fund holds a substantial amount of assets under management and there was no financial consideration, but said the parting appeared consensual and amicable, particularly given the fund managers’ ambitions to grow assets.
However, Hollands did not think the changes would be beneficial for existing investors in the Findlay Park American fund because there had been no change to the management team.
Findlay said the rationale for abandoning the Latam strategy partly came down to one of Findlay Park’s founding principles to “keep it simple”. “Findlay Park will be a very simple firm – one team, focused on one investment strategy, available through only one fund,” a spokesperson said.
Brandt and Cawston want to continue managing their fund within an employee-owned firm where they can attract additional assets to their strategy, Findlay said.
“We feel that Brown Advisory will be a good home for the current shareholders of the Findlay Park Latin American Fund,” Findlay said.
Findlay Park Latin American fund performance
| 1yr | 3yr | 5yr | 10yr | |
| Findlay Park Latin American |
3.0 | 30.2 | -10.9 | 104.5 |
| FO Equity – Latin America | 4.1 | 34.5 | -11.3 | 15.7 |
Source: FE
Findlay Park funds chairman Alex Hammond-Chambers will join the board of Brown Advisory Funds to assist continuity following the change.
There will be no changes to the team, philosophy or investment process of the fund, a statement announcing the change said.
Brandt, who has been with Findlay Park since 2005, said the duo looked forward to being part of Brown Advisory’s partnership structure and its focus on long-term investment.
Brown Advisory head of international business Logie Fitzwilliams described Brandt and Cawston as “two of the most respected investors in Latin American equities”.
Fitzwilliams said the pair would add to the firm’s existing global equity capabilities and their fundamental, bottom-up, low turnover investment approach fits with our Brown Advisory’s investment philosophy.
Brown Advisory, which is responsible for $64bn in client assets, has 43 employees in its London office, which opened in 2008, including an eight-person investment team.
Mixed outlook
Brandt said Latin America is in the early days of a “synchronised cyclical upturn” and will grow in relevance to global investors as it matures.
“Long-term we expect sustained economic growth, supported by Latin America’s excellent demographics and the cumulative impact of several decades of deep reforms to its political and economic landscape,” Brandt said.
However, looking to the near-term outlook, Hollands said while GDP growth across the region has been accelerating, including in Brazil, politics remain a threat to Latin American markets.
He said Donald Trump’s protectionism and threat to scrap Nafta pose a significant threat to Mexico in particular.
“Politics is going to loom large over the region over the coming year,” he said. “On the one hand Chile recently elected Sebastián Piñera as a new, pro-business president but there are important elections this year in Colombia, Mexico and Brazil which will inject an element of uncertainty.”
Left of centre former President Lula is currently leading in the Brazilian polls, but was found guilty of corruption last year and so may be barred from standing unless he wins an appeal against his conviction. In Mexico, the left-wing candidate Andres Obrador is also leading in the polls.
Hollands described Brandt, who previously managed the F&C Latin American investment trust, as a veteran of markets in the region.
He said Tilney typically invests through global emerging market funds rather than regional products, so doesn’t hold any Latin America funds currently.
In contast, Jupiter Merlin head of strategy John Chatfeild-Roberts has long-advocated investing in regional funds in emerging markets rather than global products. He holds a small allocation to the Findlay Park Latin American fund in his Growth and World portfolios.
Chatfeild-Roberts is also a long-time investor in US equities through the Findlay Park American fund.
Jupiter Independent Funds manager Amanda Sillars said they discussed the merger with the chief executive and CIO of Findlay Park yesterday and are “very comfortable” with the changes.
Brandt and Cawston seek long-term capital growth by investing in high-quality companies they believe have very little or no balance sheet risk, are attractively valued, have strong business franchises, generate plenty of cash flow and generally don’t need to raise capital in order to finance a 15% growth rate.
