Management team shares outlook in Q&A

MILWAUKEE, WI, May 10, 2021 /24-7PressRelease/ — Baird Equity Asset Management is proud to celebrate the 5-year anniversary of the Chautauqua International Growth Fund (CCWIX, CCWSX) and the Chautauqua Global Growth Fund (CCGIX, CCGSX); both funds passed that important milestone on April 16, 2021. Chautauqua Capital Management is a boutique investment firm offering high-quality international and global growth portfolios. The team joined Baird in 2015, and, in 2016 launched two mutual funds.

“Our goal is to provide excess returns relative to the funds’ benchmarks and to be in the top quartile of our peer groups over a normalized investment period,” said Haicheng Li, CFA, Managing Partner. “We believe our collaborative culture and our time-tested investment approach provides us the opportunity to achieve this goal for our clients.”

We took the opportunity to ask the Chautauqua team a few questions on this milestone.

Why does Chautauqua Capital Management believe that active management is particularly important in the international equity markets?
Worldwide investing offers an expanded opportunity set. Approximately 95% of the global population and about 3/4 of the world’s economic activity (based on nominal GDP) occurs outside the United States. Given elevated growth rates in many of these non-U.S. countries, active managers simply have more opportunities to find advantaged, high-quality growth investments.

What do you make of the more-recent rotation away from growth stocks {toward value stocks}?
We cannot predict whether the market rotation away from growth stocks and toward value stocks will persist or to what extent. However, we take a great deal of comfort investing in what we believe are advantaged businesses that benefit from long-lived trends such as digitalization, e-commerce, electronic payments, factory automation, and disease therapies just to name a few. These businesses often have leading market shares and a wide growth path ahead of them. Therefore, their ability to continue growing and compounding returns over the long-term is ultimately what proves them to be so valuable to portfolios, irrespective of the market environment or the economic cycle. Furthermore, the market rotation has caused many dislocations among the stock prices of great growth businesses, as has been the case in the past, we are most excited in times such as this because we believe periods of dislocations often present the most compelling opportunities for new investments in the portfolios.

Due to the current climate of ultra-accommodative policies and economic reopening, much attention has been placed on inflation. How do you manage the Funds in response to that environment?
With respect to managing the portfolios in a potential inflationary environment, we have taken great care to emphasize companies that we believe have pricing power because of the mission-critical or value-add nature of their products and services. Because of these features, these companies are able to transmit price in inflationary environments, and therefore protect their profit margins. Furthermore, we have made some incremental adjustments to portfolios to emphasize companies with more attractive valuations in light of higher market discount rates. These measures should help protect portfolios from deleterious inflationary pressures.

One of the key pillars of your investment philosophy is having a long-term focus. Talk about why that is more important than ever and what that really means to your investment team in a somewhat short-term minded world?
Chautauqua’s collaborative research approach is organized to identify great wealth-generating businesses that benefit from long-term trends, possess sustainable competitive advantages to exploit those trends and can be purchased at reasonable valuations. Many of our companies are potential beneficiaries of the long-term growth trends mentioned above.

We seek to understand the enduring nature of a company’s advantages and what will enable it to grow faster and be more profitable than the overall market and competition over time. Obtaining this “understanding advantage” is the bedrock for our conviction to make long-term investments in holdings. On average we hold our companies for five years. However, many have been in our portfolios since the inception of our institutional strategies 15 years ago.

We conviction-weight the portfolios based on our assessment of growth, profitability and valuation. This allows us to drive returns when the market provides valuation opportunities or protect gains when valuations get stretched. Being focused, yet nimble, in a short-term minded world helps us deliver on our investment goals over a normalized investment cycle.

What makes Chautauqua unique from other global investors?
There is no one single advantage. Our culture, ability to think independently and our recipe contribute to our ability to successfully execute our time-tested investment approach.

Culture – We are organized as a collegial and collaborative group of diverse individuals
who are steeped in our approach. Each possesses a different area of expertise but has also been groomed as a generalist, so everyone brings both specific skills and broad investment understanding to the task of investment analysis. Our culture of humility and curiosity enables us to be comprehensive, focused, and nimble.

Independent Thinking – Being in a thoughtful but remote location such as Boulder, Colorado allows us to think long-term and focus on the signal not the noise. We will not outperform by investing in the same crowded ideas as everyone else. Our goal is to add value through differentiated alpha.

Recipe – Fads come and go but the enduring nature of our approach is as valid today as it was when it was initially employed in 1987. Our recipe is straight forward and requires careful precise work by talented professionals with a dedication to consistent implementation.

Additionally, we are backed and supported, in non-investment functions by Baird. This allows us to focus on deploying our investment process and taking care of our clients. Further, our concentrated portfolio and long-only investment style aligns our team structure for success. With 30-40 portfolio companies and an average hold period of five years, our team can do the in-depth work required to successfully deploy our process.

About Baird Equity Asset Management
With approximately $7.8 billion in assets under management as of 3/31/2021, Baird Equity Asset Management offers a broad array of independently managed equity investment strategies and mutual funds in the growth, value and global/international disciplines. As one of Pensions & Investments’ “Best Places to Work in Money Management,” Baird Equity Asset Management has talented investment teams working to ensure long-term quality and continuity for clients. Baird Equity Asset Management is a division of Baird, a global financial services firm that has ranked among the Fortune 100 Best Companies to Work For® since 2004. For more information, please visit www.bairdequityassetmanagement.com.

Investors should consider the investment objectives, risks, charges and expenses of the fund carefully before investing. This and other information can be found in the prospectus or summary prospectus. A prospectus or summary prospectus may be obtained by visiting bairdfunds.com. Please read the prospectus or summary prospectus carefully before investing. This also provides information about performance information to the most recent quarter.

Performance data quoted represents past performance, which is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, maybe worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. For performance data current to the most recent month-end, please visit www.bairdassetmanagement.com.

—
For the original version of this press release, please visit 24-7PressRelease.com here