Europe Compounders

THE EIGHTH WONDER OF THE WORLD?

COMPOUNDERS – THE POWER OF TIME AND QUALITY

Albert Einstein once described compounding as the eighth wonder of the world. The longer the investment horizon, the greater its effect. This also applies to equity returns when high-quality companies grow sustainably over the long term. As a Quality Growth investor, our approach has been guided for decades by the belief that time can work in an investor’s favour. When analysing quality companies for inclusion in our Comgest Compounders equity strategies, we seek:

WISDOM AND SUCCESS COME WITH AGE

WHAT ARE COMPOUNDERS EQUITIES?

Comgest’s Compounders Equity strategies − Europe, Europe ex UK, Global and Japan – are portfolios comprised of companies that demonstrate high visibility, consistency, longevity of growth and strong ESG credentials.

Europe Equities - Withstanding the winds of change

These days the world seems to be changing faster than ever. Rising geopolitical tensions and technological advancements, such as artificial intelligence, are increasing volatility in the global economy.

UNCOVERING THE QUALITIES THAT SET COMPOUNDERS APART

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.

SEEKING THE FOUNTAIN OF YOUTH : LINDY'S LAW & QUALITY GROWTH INVESTING

Although ageing is a fact of life for people, some quality companies have spanned decades, if not centuries, and remain in their prime — or even stronger. Comgest's Wolfgang Fickus highlights Lindy's Law, which explains why these "marathon runners" get better with age, and why they're the bedrock for the compounding benefit captured in our quality growth portfolios.

High conviction strategy with the aim
of achieving above-average returns with below-average risk
Focus on the visibility, consistency and longevity of growth
High return on equity, strong self-financing power and sustainable long-term profit margins
Strong ESG credentials for sustainable growth and a lower long-term risk profile

MAIN RISKS

This strategy has the following core inherent risks (non-exhaustive list):

Investing involves risk including possible loss of principal
The value of all investments and the income derived therefrom can decrease as well as increase
There is no assurance that the investment objective will be achieved