10-12 month Anniversary of the Forager Worldwide Shares Fund: reflections and plans for the future

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Last week we reached an important milestone: the tenth anniversary of the Forager Worldwide Shares Fund.

It’s been an eventful first decade for our foray into global equities, marked by a series of major market contractions. Measured in US dollars, the MSCI All Nation World Investable Market Index, against which we measure, experienced maximum and minimum falls of 14% in 2015/16, 15% in 2018, 22% in early 2020 and 26% in 2022.

We’ve seen Donald Trump come and go, Britain leave the European Union, Western governments place bonds under steep interest rates, and much of the world is locked up in their properties to mitigate the spread of a coronavirus.

A wonderfully regular decade of returns

Throughout all the turmoil, the bottom line has been pretty close to what investors might have anticipated a decade ago. When measured in native forex, the index has returned below 10% contact each year over the period. Australian dollar indices traders are up 12.4% on a yearly basis, due to currency depreciation over the period (the Australian was buying a couple of US dollars when we launched the fund, the main reason we were in a rush ) .

These are completely regular returns from investing in stocks – common long-term returns of 8-10% each year in Australia and the US – and the ability to compound is starting to kick in de facto. A decade of returns of 11% each year means you have more than triple your money.

However, you may have achieved all of that in a low-cost index fund. Our job is to make our buyers beat the index. A decade later, we have not achieved that. As of the end of January 2023, the $100,000 initially invested with us was worth $290,000, due to a compound annual return of 11.3% each year. That’s about 1.1% each year worse than the index.

While it’s far from a catastrophe (Forager’s inventory performance has been slightly higher than the index, offset by base and performance fees), the next decade should be better. That comes down to a couple of key tweaks.

The DNA of a fund management company

Forager started with me and my financing method. Most of it was in my head. That deeply contrary method had advantages (big winners in deeply unloved stocks like RHG and Service Stream) and shortcomings (deeply unloved stocks that went bust like Freedom Insurance coverage).

I realized this quite early on and knew, especially as we got older and started running a couple of funds, that we would have liked to have completely different skills and knowledge in the group. This could offset some of the shortcomings and provide us with higher portfolio returns.

However, I didn’t realize early enough that we really wanted to get the philosophy out of my head and make it part of our organizational DNA. You may have several different forces in the boat, but everyone should be rowing the same path, especially under stress.

Now we have had our analysis course written for a long time. It incorporates all the pieces that it is advisable to receive to be worth a company. Course, though, is totally different to philosophy.

I have always said that the why is more important than the what. The work must be achieved in order to deeply perceive as many companies as possible. However, money will be made by buying them when everyone else panics. Knowing when to start and why was something he did intuitively.

I’ve spent much of the last 12 months putting that instinct into written form. What should a major alternative feel like? How will we position ourselves to make the most of them? I would like to see us more conservative in bullish times and more affected when things start to unravel. Persistently, throughout the organization.

In fact, it is easier to mention it than to achieve it. But when we are going to be successful, it must be the next decade. I will be 45 years old in a few weeks and will be 55 when I reflect on the 20 year anniversary. It took a while to pick the right group, however, the four of us who participate in this fund have been together for close to four years. We are managing a comparatively small sum of money. That’s the decade with no excuses, or index funds.