GQG hits US$86 billion despite growth sell off

Leading global equity manager GQG Partners, which is now just five years old, is now four times larger than home-grown Platinum Asset Management and closing in on Magellan. Named for the core of its investment philosophy ‘Global, Quality, Growth’ the experienced team managed to add another US$36 billion in assets under management in 2021 even as equity markets experienced their most volatile period in modern history.

Commenting in their latest quarterly missive, the group highlights that 2020 was a ‘complete market cycle compressed into 12 months’. GQG, which has an Australian connection through the ownership of our own Pacific Current Group (ASX: PAC) is among the fastest growing asset managers in the world. PAC itself has powered to AUD$112.8 billion in assets under management, almost solely due to the growth in GQG, which now makes up US$86 billion of the US$112 billion after growing 16% per cent in 2021.

The majority of this growth has come in the form of inflows, both wholesale and institutional mandates, with performance in their primary Australian vehicle, the Global Equity Fund, outperforming its benchmark, 6.6% to 6.0%.

The ‘weaker’ performance was primarily due to the inherent growth or earnings growth focus of the group with ‘cyclical’ names recovering on the back of positive vaccine news. Management put Carnival Cruise Lines (NYSE: CCL) forward as an example, which jumped 40 per cent, noting that their exposure to this most heavily impacted sector of the market was ‘nil’ because they ‘feel they have very little visibility on the earnings potential of these companies’.

The high conviction portfolio of 43 companies includes well-known names like Astra Zeneca, Service Now, Amazon and Alphabet, the majority of which underperformed in December but showed signs of resilience during the January reporting season. GQG highlight their ‘strong commitment to striving to protect our investors’ assets’ as a potential factor in periods of short-term underperformance, but this approach clearly delivers in the longer term.

Alibaba remains a key holding of the fund, despite the postponement of the float of ANT Financial due to Chinese regulatory pressure, with management backing in the world’s largest e-commerce company to recover in 2021. They highlight the fact that the company is still gaining market share and its valuation is now attractive ‘value’ investors.