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Seafarer Overseas Growth and Income: an invitation to confer and/or to share your questions

Dear friends,

We have a conference call with Andrew Foster this Thursday evening, April 16, from 7:00 - 8:00 Eastern. Andrew manages SFGIX/SIGIX, which qualifies as a five-star fund under Morningstar's system and a Great Owl under our most risk-conscious one. Only 10 of 180 EM stock funds hold that distinction; of those, Seafarer has the distinction of being no-load, open to retail investors, and low cost (I think it has the lowest e.r. of the retail EM Owls).

The fund is up 13% YTD, 10% annually over the past three years, top 3% of its peer group. Andrew is one of the best communicators and best stewards around.

You'd be more than welcome to join us for hear from, and chat with, Andrew on Thursday. Failing that, I'd be delighted to share any questions you might have with Andrew and then I'll report back his responses in a "highlights" note here on the board.

As always, it's free and it's just a phone call so you can join in from pretty much anywhere.

Back to commenting on drafts of my students' papers,

David

Comments

  • A look at the risk/return metrics since launch...

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  • Thanks David.

    Would enjoy a hearing Mr. Foster's philosophy on dividends...if and how does it factor in his portfolio construction.

    And, perhaps, a little on how he manages capital gains.

    Looking forward to the call, as always.

    c
  • edited April 2015
    Probably can't be on the call but will catch the replay/summary. Have always invested with Mr. Foster since reading about him at Mathews. Mr. Foster's answers to the following, should you ask him, will not affect my allocation with him. 1.) Morningstar lists 35 stock positions or holdings currently for Seafarer. Is this the approximate number of positions he will be targeting going forward ? 2.)If not, what are the factors that has him at 35 now? 3.) Does Mr. Foster spend his resources researching "frontier" markets or should we look to other funds for exposure to this market? Thanks for all that you, your " team", special commentary writers Charles and Edward, and the contributors to the discussion board do for all of us. Quite the successful endeavor be MFO.
  • edited April 2015
    Yes, David, MourningStars has a good question there re "Does Mr. Foster spend his resources researching "frontier" markets or should we look to other funds for exposure to this market? " Under the impression that he does not, we hold WAFMX also, so a little more info on that would be appreciated. Thanks, MourningStars.

    Edit/Add: How thoughtless of me... thanks to David, also, big-time!
  • edited April 2015
    @MourningStars and @Old_Joe It'd be good to hear Andrew Foster, but on their website it says:

    http://www.seafarerfunds.com/ask-seafarer/#how-is-the-fund-different

    The Fund has a broad geographical mandate, rather than an arbitrary one prescribed by an index; it spans markets that are variously categorized as “frontier” and “emerging.” The Fund can also invest in developed countries that have significant economic and financial linkages to developing countries.

    and also:
    http://www.seafarerfunds.com/ask-seafarer/#what-about-the-funds-geographical-exposure

    and one more from their website:


    Geographic Focus

    Developing countries including, but not limited to:

    Brazil
    Chile
    China
    Colombia
    Czech Republic
    Egypt
    Greece
    Hungary
    India
    Indonesia
    Malaysia
    Mexico
    Peru
    Philippines
    Poland
    Qatar
    South Africa
    South Korea
    Sri Lanka
    Taiwan
    Thailand
    Turkey
    United Arab Emirates
    Vietnam

    Selected developed countries with significant economic and financial linkages to developing countries, including:

    Australia
    Hong Kong
    Ireland
    Israel
    Japan
    New Zealand
    Singapore
    United Kingdom
  • edited April 2015
    I've looked for FM holdings in the reports from time to time, and the only ones I recall are Vietnamese companies, which Andrew touted early on as having a lot of potential. (Recall he held a V. etf for a while before he was cleared to trade in V. stocks directly.) Unless I've just missed other FM holdings, I do think it's a worthwhile question (regardless of the broad prospectus language) whether he would foresee ever holding more than a very small stake in FMs.
  • edited April 2015
    Question: The fund as of 1-31 had ~ 12% in preferreds, convertibles, and sovereign bonds. Does Andrew continue to see opportunities in those assets, and if so, could he explain in what sectors & countries he sees value there now?

    Thanks for asking and for setting up the call, David.

    Cheers, AJ

  • edited April 2015
    A few questions for Mr. Andrew Foster:

    Where do you plan to go for your next Field Notes trip?

    Would you consider adding a retail+ share class with a min of $50k and an e.r. in between your retail and institutional?

    At the start of the fund, there was a monthly commentary. Lately, this hasn't been the case (zero market commentaries in 2013 and one in 2014). What's the plan going forward? Will the quarterly portfolio review replace this?

    Could you please provide some context for the holdings that are showing a negative EPS growth for this year? Looks like some financials, REITs, and a healthcare stock.
  • I just found out something awesome about Seafarer. If you open an automated investment plan with the mutual fund site directly you can buy into the institutional shares without the 100k minimum. That is amazing. I don't know of ANY mf companies that give the little guy such a break. I own a tiny bit of Seafarer now but I plan on adding more through the website. Has anyone else noticed this?
  • Excellent call, once again.

    Nothing like it nowhere...
  • Damn fine! Objectives of the conference call were met, and more.
  • When I received my latest paper statement through the mail, I did see that bargain offered, yes. Seems to me that Seafarer is much more shareholder-friendly than many others out there! I own it, too. I just won't let anyone AUTOMATICALLY take money from my accounts, for any reason. Otherwise, I'd be there, doing that, in a heartbeat.
  • @MikeM2, American Century will let you buy select funds at $50 a month and taken directly from your checking or savings account. I do agree, services like this are uncommon. It is nice to see Seafarer do this.

    I remember when it was $25 a month at AC.
  • @JohnChisum- I inquired once, and Schwab will let you do that also, avoiding the repetitive service charge for on-going purchases where you're trying to "average into" a position. I'm not certain that that applies to all types of purchases, but evidently it does for at least some.
  • You are right Old_Joe. I remember hearing about that also. It doesn't surprise me though, Charles Schwab has top notch customer service.
  • Seafarer also waives the institutional minimum for AIP users. Nice.
  • @MikeM2, This "AIP" option is a great way to gain access to institutional shares. Wonder how wide spread is this practice among the major brokerages, I.e. Fidelity, Vanguard, and etc?
  • Missed the call and where can I access to the replay?
  • edited April 2015
    Looking at Seafarer webpage. Estimated EPS growth in the fund from out of Middle East & Africa is 2% this year and 16%, next year. Holy cow. There are only two holdings in the fund from that geographic region, and both are in South Africa: SANLAM and EOH Holdings. SLMAF. From the EOH website: "...over 40% compounded year-on-year growth..." No way they can keep that up. Eh? Anyhow, the two South African companies = 5% of the Seafarer fund.
  • The user and all related content has been deleted.
  • Looks like at least the latest conference calls get a summary and a replay link under Funds/Featured Funds, from the menu at the top of each page. I guess we can assume the Seafarer call will wind up there when ready (?).
  • Working on the highlights now. The link if you're anxious is http://78449.choruscall.com/dataconf/productusers/mfo/media/mfo150416.mp3.

    David
  • edited April 2015
    Curious why he would not disclose if he continues to purchase shares of his fund. He does have a $1M in it. So answer either way wouldn't have mattered much in my mind. I am an investor and would have appreciated if he answered the question.

    Or is it because he is thinking of starting another fund? I wouldn't want him to, but may be he is and that's where he is dedicating more capital.

    Also he clarified it is Emerging Markets Growth and Income. Not International Growth and Income. So it would serve investors better word Overseas in the name was replaced with word Emerging.
  • Hi, VF.

    I don't know the answer to the first. I do know that there have been managers who put every penny they have in their firm and in their funds at start-up to help get the fund to a viable level. As the years pass and things stabilize, they try to de-lever a bit, set up a 529 for the kids, rebuild their personal emergency account, buy shares of Etsy and so on. That causes them to sell shares of the fund, not from a lack of conviction but from competing obligations. That's sometimes misread, especially in the world of "press 'send' first, get the facts later," so they create a "that's something we don't talk about" policy.

    Again, I don't know if that's the case here. Given Andrew's profound and ongoing commitment to the fund and his shareholders, though, I suspect something like it is the case.

    As to the second, you always want to be careful of running afoul of the SEC's name rule. If you put the name of a distinct asset class in the name of your fund (David's Fund of Bankrupt Corporations), then you need to keep 80% of your assets there. Given the fluidity about what qualifies as an emerging market and the opportunity for gaining EM exposure through, say, investments in Irish companies, "overseas" in the name and "diversified global emerging markets" in the explanation might trigger far fewer headaches.

    For what that's worth,

    David
  • I was expecting Mr. Foster to explain that they have a policy that everyone at seafarer had to invest in the fund. I am disappointed that it isn't the case.
  • In general, I share your preference that at least the investment professionals and trustees invest. As part of a series trust, Seafarer has an external board and such trustees rarely invest in the funds they're overseeing. Internally, Seafarer only has seven non-clerical employees; we know that Andrew and Michelle have more than a million dollars in the fund. It might well be the case that the other folks do, too, though I'm also sympathetic to the notion that requiring significant investment in an EM fund might not be appropriate to every employee.

    David
  • edited April 2015
    Thanks David. I agree with your comment, but I have to add that I still believe that seafarer (and others) should require some token investment in their fund even if there are only seven folks. To me, that seems reasonable.
  • I just don't want him starting another fund. I'm good with his motivations. I just don't want to learn he started more funds later. SFGIX to me is like MAPIX and MACSX. I don't want him doing a MAPTX etc. One fund is good.
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