To preserve its boutique culture, the firm – which has been running Asia Pacific, Emerging Markets and global equity strategies since 1988 – has been split into two separate entities: Stewart Investors in the UK, and FSS in Hong Kong.
First State Stewart has always preferred to keep small, dynamic teams to encourage the individual members to develop and thrive; and the historically small size of the group has been critical to their success. However, for some time, they have been contending with the burden of scale. With its successful long-term track record, they have experienced sharp inflows of investors’ money over the years such that a number of their flagship funds have ballooned in size. They have therefore had to be disciplined in closing a number of their funds to new investment so as to prevent capacity issues and to protect shareholders’ interests.
In order to address capacity, First State Stewart – which invests in good quality businesses to achieve long term capital growth – was aware they could reduce their own internal threshold as to what constitutes “quality”. However, this is clearly undesirable and would compromise what they want to achieve for their shareholders. The next logical step was therefore to separate the teams, thus ensuring they keep their own identity while also enabling opportunities for future growth.
First State Stewart believes that their teams are the strongest they have ever been. Moreover, they are happy that the firm’s investment process, which is deeply embedded in their DNA, will continue to be implemented successfully.
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