In this series of short profiles, we ask leading fund managers to defend their investment strategies, reveal their views on cryptocurrency, and tell us what they'd never buy.
This week our interviewee is Craig Martin, the co-manager of 4-star rated Vietnam Holding Limited Trust, managed by Dynam Capital.
Which Sector Shows the Biggest Promise in 2023?
Artificial intelligence. Over the last 15 years there have been tremendous leaps in the sophistication of machine learning algorithms, the availability of vast, powerful cloud computing services, and access to huge amounts of uniform training data. The combination of these point to an inflection point in the tools we have available (GPT-4 is just the beginning). If the tools are used well, they have the ability to advance every other sector. There is rightly concern on the ethics of AI, and so this needs to be balanced, but stopping its growth or development would be misguided.
What's the Biggest Economic Risk Today?
Aside from ignoring climate change, the biggest risk is a polarised, de-globalised world. 30 years ago Francis Fukuyama claimed history was dead – sadly we all need to watch and listen to the waves of history. There are echoes of cold war mentality on several fronts, all of which could impact free trade and economic growth. I am a firm believer in the gains from trade, and Vietnam as a country has become of the most open trading countries in the world (with overall trade levels twice the size of the overall economy). Since the end of the last cold war, trade, and foreign direct investment have helped countries such as Vietnam grow to the benefit of all.
Describe Your Investment Strategy
We invest in publicly listed companies in Vietnam. It is a country that has all the characteristics of an emerging market and yet is still a frontier market in terms of coverage by global investors. Over time we think the market will be re-rated, and attract more foreign investors. The country has enjoyed a multi-decade high growth in per capita GDP and is at an inflection point in its urbanisation rate (38%, where Western Europe was at the end of the second world war). It has a young, dynamic workforce and places a high value on education (40% are of its graduates are STEM – science technology and math – four times the world’s average). Our investment strategy is underpinned by ESG – we have been a leading advocate for responsible investing since inception – we believe it helps mitigate company selection risk, and also guides our conviction-led strategy.
Which Investor Do You Admire?
2000 years ago St Matthew’s Gospel records a story about fund managers who each received an initial allocation of capital. One was risk-averse and buried the money in the ground. He got fired as a fund manager. One took a risk and doubled the investor’s money. He was rewarded with even more assets under management. He’s the investor I admire.
Name Your Favourite 'Forever Stock'
FPT (FPT). This is a Vietnamese technology company that I have invested in twice. Once as a private company twenty years’ ago, earning about a 500% return on capital, and then in the last five years or so it has the top listed company in the Vietnam Holding portfolio. It has compounded its earnings by more than 30% per annum over a decade through its three strong business legs: it provides outsourced software services to Global Fortune 500 companies, it is involved in the digitalisation of Vietnamese companies and institutions, and it educates more than 100,000 people in science, technology, engineering and math.
What Would You Never Invest In?
Tobacco or CBD stocks. I don’t think we should promote products that we know can play with people’s respiratory or mental health. The brain’s dopamine circuits are beautiful bits of creative engineering on their own, and need no additional push (other than morning sunlight and good coffee).
Growth or Value?
If it has to be one, I would say ‘value’ as it requires greater analytical discipline (growth at a reasonable price, is however our portfolio strategy). That said, some companies are ‘cheap’ for a reason.
House or Pension?
Pension (self-invested, well diversified and including emerging markets and emerging technologies). Although a house can be an asset, mortgage, maintenance and council tax are definite liabilities.
Crypto: Brilliant or Bad?
Crypto as a technology is brilliant. The original ‘Satoshi Nakamoto’ paper is wonderful and Vitaly Buterin (Ethereum founder) is a genius. But bad crypto (like bad stocks) will surely disappoint.
What Can be Done to Improve Diversity in Fund Management?
More women in the investment teams, more women on the boards and more women CEOs in the portfolio companies. At Dynam capital half our team are female, 90% are native Vietnamese, and some of our top performing companies are helmed by women. PNJ (PNJ) – a leading jewellery retailer, and the second largest position in the fund – is a case in point; the board and team responsible for overall strategy (including ESG) are led by women.
Have you Ever Engaged with a Company and Been Particularly Proud (or Disappointed) in the Outcome?
Over the last few years we have been working with PNJ (the leading jewellery company mentioned earlier). We are a small investor, but we have a good working relationship with the team. We have shared our journey as a responsible investor with them, and they are really engaged in building up a strong culture of transparency and corporate governance. We were privileged to have one of their board members join a webinar we recently hosted on the retail sector in Vietnam, and we featured them in an article on sustainable consumption.
What’s the Best Advice You’ve Ever Been Given?
My father was a City Editor of UK daily newspaper, and died young but gave me three pieces of advice:
‘A stock can go to zero, there is no magic to prevent it doing so’
‘Always leave some profit for someone else’
‘Never invest what are you aren’t willing to lose’
What Would You be if You Weren’t a Fund Manager?
A computational neuroscientist. More than 33 years ago I was trying to get computers to recognise facial expressions. This was Artificial intelligence when it wasn’t cool, wasn’t understood and didn’t work – it must be a very exciting area to work in currently.
