ORINDA, Calif.—Litman Gregory Fund Advisors, LLC, an affiliate of wealth management firm Litman Gregory Asset Management, today announced the addition of Pictet Asset Management as a sub-advisor to the Masters International Fund effective June 30, 2016.
Pictet Asset Management is a wholly owned subsidiary of Switzerland-based Pictet Group, an independent partnership that has been focused solely on managing assets for private and institutional clients for over two centuries.
The Litman Gregory Masters International Fund is a core international equity fund that provides access to the highest-conviction investment ideas of a group of highly skilled managers with varying stock-picking styles. Pictet joins four existing sub-advisor teams on the fund, including Harris Associates, Lazard Asset Management, Northern Cross, and Thornburg.
“We have been performing due diligence on Pictet Asset Management and in particular their EAFE strategy for the past two years,” said Rajat Jain, Litman Gregory Principal and Co-Portfolio Manager. “The team’s passion for stock picking and their genuine enthusiasm for running a concentrated portfolio from the outset has been very clear. We believe they have the potential to deliver strong long-term returns and will add valuable diversification benefits to the fund.”
The Pictet investment team approaches equity investment from the perspective of a fractional owner of an underlying business. Consequently, the focus is on the long‐term growth prospects for the business.
They believe that:
- each business has an intrinsic value based on its future ability to generate positive cash returns. They therefore focus their research on identifying enduring business models that have the capacity to grow and generate sustainable cash returns above their cost of capital.
- the value of compounding high returns on capital over long time periods is often underestimated by the market.
- a portfolio of growing companies, which trade at a discount to their intrinsic value, will outperform across market cycles.
This approach of focusing on growing businesses that can generate return in excess of their cost of capital but that are trading at a discount to Pictet’s conservative estimate of businesses’ intrinsic value results in a portfolio that is not tilted in a material way to either “growth” or “value” style factors.
Pictet’s Litman Gregory portfolio will be managed by Fabio Paolini and Benjamin Beneche. Paolini, head of EAFE equities, joined Pictet Asset Management in 1997 and works closely with the EAFE and European teams. He holds an economics degree from the University of Siena, Italy, and is a Chartered Financial Analyst (CFA) charterholder. Beneche is a senior investment manager on the EAFE equities team and works closely with Paolini and the other analysts and portfolio managers on the EAFE, Europe, and Asia teams. He has an economics degree from the University of York and is also a CFA charterholder.
“Based on our research, we believe Paolini and Beneche have a superior understanding of business models and the risks inherent in businesses,” says Jain. “We believe our fund will provide them with a structure that empowers them to create portfolios with the highest return potential.”
For more information and analysis on this manager addition, see our due diligence report.