Chautauqua Capital Management’s Brian Beitner Shares Thoughts On Investing In China And Other Global Markets
MILWAUKEE, April 15, 2019 –– Baird’s Chautauqua International Growth Fund (CCWIX) and Chautauqua Global Growth Fund (CCGIX) have reached the important three-year milestone. Both funds were created in 2016 after the team at Chautauqua Capital Management became a division of Baird.
“Chautauqua has implemented a concentrated, conviction-weighted investment approach over its 13 year history,” said Steve Booth, President and CEO of Baird. “Brian Beitner and his talented investment team identify structural growth companies in both developed and emerging markets using a disciplined and risk controlled process.”
On the occasion of this milestone, Brian Beitner addressed a few questions about his outlook for China and other global markets. To link to a more detailed Q&A with more information on the Chautauqua team’s investment approach, click here.
The U.S.-China trade relationship has been a focal point this year. How are you looking at China?
In anticipation of higher prices due to tariffs, exporters and importers made forward purchases of products, benefiting both the U.S. and Chinese economies in 2018. Now we are seeing the other side of that coin, and both economies are decelerating as a result. China is arguably in a better position to weather a trade war. They are now stimulating their economy in response to weakness due to trade concerns. The U.S. took the heavy fiscal stimulus in 2018 with the tax cut and may have less room to react.
What is your long-term view on the country’s investment opportunities?
How do you view emerging markets now?
We believe there are terrific growth opportunities across a number of sectors and countries in the emerging markets. Moreover, valuations are attractive relative to the developed markets. This is especially true as compared to stocks in the U.S.
The U.S. market has been so strong relative to other markets. How do you view that dynamic as an international manager?
The U.S., through powerful monetary and fiscal stimulus, has been the economic locomotive since 2009. But at this stage of the economic expansion there is a strong case for international equities from both a valuation and growth standpoint. On a “purchasing power parity” basis the dollar is over-valued. Should that revert the international stock investor would also get an enhanced return from the foreign currency exposure.
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All investments carry some level of risk, including loss of principal. Investments in international and emerging markets securities and American Depository Receipts (ADRs) are subject to certain inherent risks including difficulty predicting international trade patterns, currency fluctuations and the possibility of imposition of exchange controls, foreign taxes and regulations, lack of uniform accounting, and the potential for illiquid markets and political or economic instability. These risks are more pronounced in emerging market countries. Additional risks in emerging marketing include currency fluctuations, foreign taxes and regulations, and the potential for illiquid markets and political instability. Other risks may be more pronounced in emerging markets. The Fund may hold fewer securities than other diversified funds, which increases the risk and volatility because each investment has a greater effect on the overall performance.