Ever since David Ragan was a child, he has been drawn to investing, to the search for great companies and great investment opportunities.
“To take some money and make more out of it by investing it in various businesses around the world is a terribly interesting prospect,” says Ragan, who is lead manager of Mawer International Equity Fund, backup manager for Mawer Global Small Cap Fund, and the winner of the 2012 Morningstar Foreign Equity Fund Manager of the Year award. “It’s difficult and competitive, but I enjoy it.”
Ragan, 32, says his investment approach involves the hard slog of going through each geographical region, and each company in those regions, in his search for firms with strong management teams and whose shares are sell- ing at reasonable prices.
The Mawer fund’s mandate is to invest in firms located out- side of North America. For the 12-month period ended Sept. 30, 2012, Mawer International Equity Fund posted a return of 15.41%, compared with a return of 8.26% for the MSCI EAFE TRI, a bench- mark index for developed markets outside North America.
“We like scouring the world for these great opportunities,” says Ragan, who joined Calgary-based Mawer Investment Management Ltd. in 2004 after graduating from the University of Calgary. Ragan became co-manager of Mawer International Equity Fund in 2007, and took over as lead manager in 2010.
Ragan says that he has honed his investment philosophy at Mawer, where sticking to investment discipline and digging deep for investment gems are core to the firm’s approach. Although Ragan begins his search for good companies by screening for strong numbers, such as price- to-earning ratio and return on equity, he also looks carefully at the firms’ competitive advantages and leadership.
IETV: David Ragan on strategies for international equities
Meeting with management, and trekking anywhere to do so, is a key part of Ragan’s approach. This past June, he travelled to Scandinavia; the year before, he went to Colombia, Peru and Brazil, where he spoke to about 30 management teams over three weeks.
“This is how you get an edge,” Ragan says. “You can’t just screen on quantitative measures. You have to grind out the extra effort in the process as well.”
Ragan says he looks to invest for the long term, which is evident in Mawer International Equity Fund’s average holding period of five to seven years. Low turnover also means cost savings, in terms of transaction fees and taxes.
Ragan believes that being based in Calgary rather than in a big financial centre is a key advantage that contributes to the Mawer fund’s success. “In cities like London, New York, Tokyo or Toronto,” Ragan says, “you find yourself going to the same meetings, and seeing the same companies, as everyone else. After a while, everyone’s doing and thinking the same thing. I think we get to think more independently out here.”
From the Canadian Investment Guide 2013.