My approach to investing
I evaluate investments in terms of the inherent qualitative characteristics of business models and management teams, and the translation of those characteristics into financial performance. Understanding the evolution of goals into strategies, strategies into products, and products into profits and cash flows is the essence of my investment process. I believe that disciplined investment in developing markets can offer opportunities for superior growth, outsized risk-adjusted returns, and maximization of the positive societal effects of optimized capital allocation.
How do history and past trends impact investment decisions?
An old aphorism states “History doesn’t repeat itself, but it often rhymes.” In the case of developing markets, the challenge is to understand the ways in which countries can evolve along broadly similar trajectories, as well as the specific local factors which may shape the particular forms that development takes. This is more artistic than scientific, and requires both knowledge of relevant precedents as well as the wisdom to discern which of the many local influences will cause variances relative to historical models.
How can economic development catalyze social and political development?
I take a holistic view of development, seeing its many facets as indivisible. While it is unreasonable to expect that economic development will be a panacea for the whole spectrum of social and political challenges (either in developed or developing markets), economic development is a necessary part of a society’s betterment. Economic development at an individual and community level can directly foster security, social inclusion, education, and political empowerment, as well as indirectly supporting artistic and cultural advancement.
What are VestedWorld’s strengths?
I believe VestedWorld addresses an underserved market on the one hand, while providing investors “on-the-ground” connections to entrepreneurs in developing markets which are difficult to develop. The expertise of the VestedAdvisors, individually and collectively, adds an additional dimension of differentiation.
Which is more important—return or impact? Why?
My own experience as an investor in emerging markets offers empirical evidence that returns and impact are not mutually exclusive. Sensibly allocated capital can support enterprises which create jobs, build needed infrastructure, offer educational and medical services, and still provide a suitable return for investors. I believe that the most compelling investment opportunities do not force a trade-off between returns and impact; they are not only compatible, in my view, but mutually reinforcing. The best managers take their social “license to operate” seriously, and devote appropriate resources to improvement of the communities in which they do business.
What are some of the perceived risks of investing in developing countries?
Risk factors (politics, macroeconomics, currency fluctuations, corporate governance, business risk) exist in all markets. In the developing world, they often occur in different proportions or forms than in developed markets. In some cases, these risks are binary (with extreme outcomes in either direction) and difficult to forecast. These risks may seem unfamiliar or uncomfortable to an investor accustomed to evaluating risk and reward in a framework more suited to developed markets. This also means that local knowledge and market-specific expertise can add a larger proportion of value when investing in developing markets, and is a further differentiating factor for VestedWorld.