Looking for the best sustainable value creators in the world? Here’s how we seek to identify them, and why you may want them in your portfolio.
Watch the video or read the recap below.
Mike: Hi, this is Mike Corcoran with Institutional Investor. Thanks for joining us as we wrap up our conversation today with Alaina Anderson. Alaina is a partner and a portfolio manager on the International Leaders strategy at William Blair. And we’ve been talking about international investing (listen to Alaina discuss the importance of international exposure). And as I just mentioned, she is a portfolio manager on the International Leaders strategy. So, Alaina, could you tell us a little bit about how do you define and identify leaders, and really what that all means for investors? How do they benefit from that?
Alaina: Absolutely. Well, we discussed this notion of sustainable value creation in our conversations. At William Blair, leaders are, or are becoming, the best sustainable value creators in the world. They are those companies that are differentiated by the combination of their business models, their management teams, their highly desirable products and services, and their ability to generate, on a consistent basis, peer-leading returns. And it’s really the combination of these attributes that we expect to result in growth that is stronger for longer than the market anticipates. So that’s what leaders are.
We believe by focusing on leaders in both these qualitative and quantitative aspects, we are able to create portfolios that, over time, may generate superior risk-adjusted returns for our investors.
How do we identify them? There’s really some quantitative and qualitative attributes that we’re looking for when we’re identifying leader candidates. From a quantitative perspective, we’re looking for those companies that are differentiated, versus their peers, by their revenue growth, by their incremental returns, and by their reinvestment rates because they generate those strong returns, and then they reinvest it in their business to continue to reinvent themselves and grow, again, stronger for longer than the market anticipates.
The qualitative aspects that we’re looking for are really around their competitive advantage. And so we look at their competitive advantages with an eye towards the competitive advantage strength, the competitive advantage health, and the competitive advantage period. And we believe by focusing on leaders in both these qualitative and quantitative aspects, we are able to create portfolios that, over time, may generate superior risk-adjusted returns for our investors.
Mike: All right. We’ve been talking with Alaina Anderson. In this case, we’ve been talking to her about leaders. And she herself is one of the leaders in fact of the portfolio of the International Leader strategy at William Blair. Thanks for tuning in.
Alaina: Thank you.
Alaina Anderson, CFA, partner, is a portfolio manager for the International Leaders and International Leaders ADR strategies.