Questions and Answers





Why have a global investment approach?

Global investing means flexibility to search out values and opportunities wherever they exist. We invest in companies, industries and geographic areas that we see producing above-average sustainable growth so as to capture higher returns consistently. We are in the business of building wealth for our clients. This requires a long-term entrepreneurial perspective in a global context. There are always economic sectors experiencing above-average growth — if not in the United States, then elsewhere in the world.

One way to capture growth opportunities is to invest directly outside the United States in Europe, in the Far East and in Latin America. Another way is to target industries that are expanding rapidly and then invest in companies with substantial sales in the world's high-growth markets, without regard to where companies are headquartered. Most above-average businesses have a global revenue base, and that is a significant contributor to the strength and stability of their long-term earnings growth.

Global diversification enhances by allowing investors to participate in the best markets and companies worldwide. It also protects total capital from the cycles of any one market. Of course there are times when markets decline; that is their nature. Diversification and the highest quality combine to help weather such periods. Safeguarding capital and preserving worldwide purchasing power must be the overriding objective of every serious growth-oriented portfolio in today's global economy.
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How do enduring investment themes benefit clients?

We invest for long-term growth by structuring portfolios around selected investment themes with staying power. These themes reflect economic and social forces that we see shaping opportunities for business for several years at a stretch. Concentrating on these themes gives our investment team a framework for evaluating the vast amounts of information available. This focus also enables us to make fewer, better decisions and allows for more precise execution of investment ideas. Once we have identified a strong investment concept, we don't have to reinvent it each day and targeting promising companies is easier.

Recognizing dominant investment themes also reinforces the discipline to hold fast in the face of adverse short-term developments. Longer holding periods provide the benefit of compound growth over time — the idea Einstein recognized as the second most powerful mathematical concept in the world. Low turnover decreases transaction costs and taxes, further enhancing the power of long-term compounding.
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How do you implement an investment plan?

We provide the continuity of a disciplined, highly focused approach consistently applied by a select team of investment professionals working closely with clients over a number of years. Our team brings to bear considerable investment experience, language skills and international institutional familiarity to benefit our clients.

Assessing an industry or individual company today requires a global yardstick. Within our group, we use our judgment, training and experience to analyze international financial statements and to factor in the local economic and currency considerations that affect the investments we make.

These capabilities are reinforced by well-established relationships with brokerage and banking intermediaries, economic consultants and market analysts in Europe, Asia and around the world. Furthermore our client community has a global presence and brings a global perspective. A significant percentage of the assets under our management are owned by non-U.S. entities and individuals. They are a valued source of information.

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How do you build and preserve wealth in any market?

We deliver a highly personal advisory relationship tailored to each client. In addition to our strong performance record, we assure that overall costs — including investment management fees, custody fees and transaction charges — are minimized. These are, as a total package, low by industry standards. Our focus on long-term investment themes produces a management style characterized by long holding periods, concentrated portfolio positions, low turnover and high tax efficiency, which enhances multi-year compounding of growth.

All too often, investment advisors manage portfolios for taxable and tax-exempt investors in the same way, even though taxes diminish returns more than any other cost for taxable investors. In contrast, we are mindful of the tax ramifications of our investment decisions because many of our clients pay taxes and have a multi-generational approach to increasing their wealth.

Furthermore, in our role as investment managers, we often can be helpful to our clients as they implement any number of financial strategies. Our group has a wealth of experience based on years of consulting with clients and other service providers about such matters as: buying property; arranging financing; evaluating private ventures; and structuring partnerships, foundations and trusts. We work closely with attorneys, accountants, tax advisors and estate-planning specialists to coordinate effective financial solutions for clients.
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What is your responsibility to clients?

There is a connection between how we manage money and how many of our clients attained their wealth. Most either created wealth through their own entrepreneurial talents or acquired wealth built by a previous generation. They understand the idea of being a good shepherd of capital and know the importance of long-term staying power and compounding.

One of the best methods of maintaining a long-term focus and preserving capital is to have a clear investment plan that is in concert with your objectives so that you are not pressured by short-term market events. Many of our relationships date from the 1970s and those portfolios have compounded to significant size because they have held fast to an investment plan focused on long-term growth.
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What do you mean by client service?

Building long-term wealth for our clients is our only business, and our style is highly personal. We have great respect for the experience and views of our clients. As client relationships evolve, we take care to ensure that clients understand the reasons behind our investment decisions. We also write a regular investment commentary for friends and clients.

In addition, when we report portfolio results quarterly we summarize the rationale for companies in the portfolio. Because we recognize the importance of careful scorekeeping for our clients, we are diligent in providing consistent performance reporting in accordance with GIPS® standards. Portfolios are managed — and performance measured — against objectives that have been clearly agreed upon with our clients.

We meet regularly with clients to review objectives and performance in detail and provide other financial advice and assistance that may be helpful. Our advanced technology base and efficient administrative support give clients and their advisors access to reliable, timely information.

Communication is not incidental to what we do. It is integral to our success and yours. Our objective is to delight our clients — both with the returns they achieve and the service they enjoy.
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