In 2011, it was revealed that Olympus, the Japanese optics manufacturer, was involved in a $1.7 billion fraud, one of the largest and longest in corporate history. The company's CEO, Michael Woodford, was among the first to raise the alarm and was dismissed after just two weeks in the role. Although Comgest did not hold Olympus in 2011, we believe the lessons learned from this scandal can guide future investment decisions.

Smaller companies have underperformed in recent years as large-cap companies have recorded outsized returns. Despite this trend, we believe that there are several examples of smaller companies in Europe that possess the right mix of quality characteristics and growth drivers to potentially deliver substantial returns over the long run. At Comgest, we aim to build our portfolios with quality companies with enduring competitive advantages, irrespective of their size or market capitalisation.

At Comgest, we see the parallels between surfing and our own quality growth investment approach. Just as experienced surfers may wait hours before paddling out into the water and selecting a wave, we typically conduct years of fundamental research to determine whether a company meets our quality growth criteria. Liudmila Strakodonskaya, ESG Analyst, and Xing Xu, ESG Analyst / Portfolio Manager, detail how environmental, social and governance (ESG) factors fit into our research, investment selection and portfolio management process, spanning from India to the United States.

China’s late September stimulus measures took many investors by surprise. Misperceptions and fears have convinced many that China is no longer an investable market. Beyond the macroeconomic challenges and headlines, Comgest believes that China remains a great hunting ground for quality growth companies.

US equity investors all suffer from information overload. The growing number of companies they can invest in grows every year, each vying for capital and with many promising to be the next big thing. In the fast-changing US market, discover why we choose to pass by the short-term hype and focus on our long-term investment strategy.

How does M&A factor into the growth of compounders companies? Being a “marathon runner” requires more than just a venerable age (an average of 126 years in our portfolio). Over time, these companies have used their resilience and built up competitive moats yielding exceptional free cash and healthy balance sheets. By leveraging these elements, compounders seize on M&A opportunities to fuel future organic growth.