Executive chairman Alain Bouchard of Alimentation Couche-Tard, one of the companies included in the Excel Billionaire Leaders Fund.Ryan Remiorz/The Canadian Press
A new global equity fund will now allow Canadians to invest with some of the world's richest business owners.
Excel Funds Management Inc. has launched the Excel Billionaire Leaders Fund – which invests in companies that are owned by billionaires.
Currently there are 2,100 billionaires worldwide, with about 500 of them running publicly traded companies.
"The investing landscape is ever-changing and we recognize that today's market can be a challenging environment to be investing in, so we wanted to look at some of the individuals who have been able to amass an enormous amount of wealth through all the varying landscapes," says Eric Valderrama, senior vice-president of national sales at Excel Funds. "Billionaires are a rare group of individuals that have a time-tested ability to capitalize on business opportunities, creating and preserving wealth in a way that others cannot."
Management fees for the adviser series of the fund is 2.0 per cent with a minimum investment of $250.
The fund invests in 40 to 50 billionaire-owned companies that have a competitive advantage in their respective sectors. Managed by Excel Investment Counsel Inc. (EIC), fund managers will focus on long-term capital appreciation and will use a disciplined stock selection criteria to invest in companies which have high growth potential and pricing power.
The fund's top holdings include Chinese tech giant, Tencent; South African pharma company, Aspen Pharmacare; and U.S. coffee giant, Starbucks.
A top holding based in Canada includes convenience-store operator Alimentation Couche-Tard Inc. – owned by the Bouchard family.
In the stock selection process, Christine Tan, senior portfolio manager at EIC, said she looks for billionaire-owned businesses with free cash flow; solid financial productivity as measured by return on equity, return on assets, and return on invested capital; scalable business models and superior earnings per share growth, that are trading at less than intrinsic value.
"There are a number of key factors we focus on when we look for which of the 500 companies we would own," Ms. Tan says. "We don't just look for companies that have a competitive advantage but also the numbers. I consider billionaires to be visionary entrepreneurs who know how to allocate capital efficiently."
One of the reasons behind the success of companies led by billionaires drills down to their personality traits, says Ms. Tan, which includes obsessive business focus, exceptional determination and significant ownership position.
"Most of these owners have large ownership stakes, so there is a lot of skin in the game," Ms. Tan says. "At the end of the day if they make a wrong decision, then they have more to lose than I do as a shareholder."
Clare O’Hara