As we close the second decade of the new millennium, we take stock of the most challenging period of my professional life. During this past ten years, we have witnessed a huge consolidation in the asset management business around a small number of giants of the industry who have dictated the narrative and suffocated the industry. The resultant huge swing away from active management to passive and index-based strategies has in fact deprived USD based investors of active participation in one of the great bull markets in history, and yet left asset managers smugly satisfied that relative to the USD based returns of the EM indices, they have done a good job.
Nothing could be further from the truth, however. Over the past decade, Emerging Markets have exhibited growth that has dwarfed their anaemic counterparts in the West. Equity markets indices have indeed significantly underperformed, but the shifting composition of these markets away from old components of the indices to new companies, that were unheard of a decade ago, has created enormous wealth for the shrewd, active EM investor. Our own emerging markets portfolio has delivered circa three times the index returns since its inception in June 2012.
Nevertheless, one cannot escape the fact that many of these markets overall still today trade at their biggest valuation discount to developed economy stock markets in the post-war era.
And so, as the new decade commences with renewed optimism, we are about to embark on a period of sustained outperformance of both equity markets, and emerging market currencies relative to the dollar.
With that in mind, Milltrust is relaunching its managed account platform in Cayman, as an AIFMD compliant, regulated portfolio to provide flexibility, transparency, safety and liquidity to our clients across the globe. We are making the managers we work with from across the globe available to our clients as segregated building blocks, for a bespoke approach to EM investing, all through a single custodial platform.
Milltrust was established almost a decade ago. This is now the 10th year of our existence. Sustainable Prosperity was coined as our motto some years back, but every year it seems even more relevant to our identity as we seek to differentiate ourselves in a crowded field.
Looking across our portfolios, from the carefully screened and actively managed emerging markets funds, to the sustainable agriculture portfolios, combined with our cutting edge science and technology investments, Milltrust is now positioned as a joined-up, forward-thinking firm, offering investors a diversified set of long-term investment themes, in step with the critical challenges of the 21st century.
Our long-term active approach delivers much-needed patient capital to improve lives, support entrepreneurship, and feed the world’s growing population in a sustainable manner. Our commitment to the environment and tackling climate change runs deep across our portfolio but is best illustrated by our new collaboration with Environmental Investment Services and the World Wide Fund for Nature in Hong Kong, with whom this month we have launched The Climate Impact Asia Fund.
The past 12 months has seen us develop our first foray into private clients through our tie-up with Ai specialists, CerraCap Ventures. Every company in the CerraCap portfolio has an up round last year which is a significant achievement.
Also, British Innovation Fund will be given a new lease of life with the appointment of a new colleague, Guy Pengelley, who joins us this month from the corporate finance department at Peel Hunt, and will assume the role of Investment Director. We anticipate significant growth and increased diversification.
Our agricultural ventures in Australia have continued to deliver contractually guaranteed income to our investors against the backdrop of one of the longest droughts in recent history. Thankfully they have not been directly impacted by the unrelenting bushfires, which are wreaking havoc across the bush and National Parks. The comprehensive system of tradeable water rights means water can never be taken for granted and is factored into the costs of producing food and fibre which, unlike other agricultural markets, ensures the most efficient allocation.
Across the Tasman Sea, our New Zealand corporation, Waitonui Milltrust, has quickly become one of the leading dairy operations in the country and continues to expand its footprint. We have significant plans for this year, as we develop a sustainable, grass-fed, non-intensive protein platform to meet growing demand from China.
This year, we also plan to develop a significant new initiative in wealth management in cooperation with international partners, who recognise the importance and growing stature of Singapore as one of the world’s leading booking centres. Watch this space.
Wishing you all a happy and healthy New Year as we celebrate a new decade and our 10th year as a firm.