One of my favourite aspects of working in emerging market fund management was the frequent travel across the world for on-the-ground research. I would meet thoughtful people and return home with lateral insights, helping our team invest more profitably at less risk. A former business contact of mine set up a business that designs such trips for institutional investors. I joined him a few weeks back.
Global Frontiers Inc. designs and runs thematic research trips to Asian markets for institutional investors. My partner has been organising such trips for the past 15 years and was one of the first to take delegations to places such as the Philippines, Sri Lanka and, more recently, Myanmar.
Whenever I travelled in my previous job in emerging market fixed income, I used to split my trips between those organised by investment banks and those I did myself. The former has its advantages: it’s a convenient way of letting the banks leverage their local contacts and get good groups of investors together (often the best source of insights). One doesn’t need to do much apart from booking flights and showing up in the mornings.
Most of these trips would follow a time-tested scheme: as the main idea was to get an update on “where we stand” in the respective country, meetings would almost invariably include central bank, finance ministry, debt management office, economic analysts and possibly, for good measure, some politicians and even a journalist.
The client wouldn’t need to pay for these trips directly – they’re part of the normal business engagement between investment banks and asset managers. But of course, when you trade a bond with these banks, the bid/offer spread, i.e. the implicit fee you pay when doing business with them, includes the cost for organising such trips. And of course much more. The more often you go on trips with a specific bank, the more explicit the expectation to push more flow their way becomes.
We want to do two things differently with GFI: first, we want investors to pay us directly, per agenda day. This, in our view, eliminates any conflict of interest because we are not seeking to establish business other than trips with our clients. Second, and more importantly, we hope to organise better and more “holistic” trips than our competition.
As said, the other half of my travel back in the days, I used to organise myself. This would allow me to test different, longer-term investment ideas with people on the ground, rather than second-guess the market consensus regarding shape and slope of the local interest rate curve and/or foreign exchange movements (which, although important and potentially lucrative, are often too short-term to be factors guiding long-term investors).
I would meet academics, analysts, civil society and local bureaucracy, but also very importantly local businesses (including the local offices of the one I worked for). I would travel to other cities, take more time. One trip I remember fondly was a two-week tour de force through Latin America, visiting six cities in four different countries.
If an important decision regarding one country was taken somewhere else, I would go there (e.g. Brussels for matters pertaining to EU enlargement, especially re Turkey). Not unimportantly, if the country I was visiting was relatively unknown to me, I would complement my research by reading a good book or two, or going to a local museum.
The end result came in the way of more in-depth, independent research as well as better preparedness for event risk in the dozens of countries we had exposure to. Our investment scenarios and themes crucially depended on these trips, and more often than not, the individually designed ones turned out to be the more inspiring and eventually important ones.
The holy grail of investing is of course to translate on-the-ground insights to actionable investment ideas. Yet in the absence of a clear position, a general preparedness is inherently valuable, too. More than once, management expected me to know what was going on when they had read about volatility in a specific emerging market, often from the Financial Times. Being on top of the agenda and future timeline is an important reason to go on trips in itself.
With GFI, we intend to take onboard many of the points above and deliver a product that suits the requirements of modern-day institutional investing. We want to facilitate an investment style that cuts across micro and macro, asset classes and national boundaries.
We do this by organising agendas that include our carefully vetted thought leaders from a variety of backgrounds. We travel in small groups of select institutional investors, bringing together some of the most prolific professionals from the field. We have unparalleled access in many of the Asian markets, drawing on many years of on-the-ground research. By consulting with our clients before and after, we know what they expect. We know where to deliver but also where to expand on the consensus-driven vantage point.
Get in touch if you need more information or want to chat – send an email to benbansal [at] globalfrontiersinc [dot] com.
