Updated GQG portfolio holdings are available - significant underweight Tech, page-16

Hi Andrew

I dont see the NTA as a key paramter for valuation of funds management businesses. This business needs little capital. I set out below what I like about this investment and the key valuation metrics. These are earnings, earnings growth, earnings sustainability. The key to earnings is FUM, FUM growth.

GQG attracts FUM principally because of consistent investment out-performance and lower relative volatility (Sharpe Ratio). GQG funds manage downside risk better than their largest peer funds (as measured by 3 year standard deviation). GQG has invested in distribution to tell this high performance low-risk story to new clients. I believe GQG has greater upside than downside.

GQG are growing their product offerings, latest being Private Capital Solutions, leveraging their capability and trust and starting to tap huge private capital pools. That strengthens the business and has massive potential growth. (Think KKR, Blackstone, Brookfield...).

Positve factors for GQG:

* consistent track record of out-performance
* very low fees (assists relative performance and attract FUM)
* strong investment in distribution (eg new Abu Dhabi office)
* all contributing to consistent FUM growth
* excellent control of expenses maximising profits
* signficant alignment with the key talent in the business own more than 60% of GQG

So its a very good business, what about the entry price?

* attractive valuation 2.4% of FUM, below local benchmark Magellan (MFG) which is valued at 4% of FUM (down from 4.9% from early January)
* if GQG traded at the same SP/FUM ratio as MFG, its SP would be $3.50.
* 11.9% yield based on February 2025 dividend, annualised.
* quarterly dividends, high payout ratio (confidence, visible sustainable earnings), dividends have increased 9 quarters in a row

See market cap as proportion of FUM for GQG and locally listed peers MFG, Regal adn Platinum for March 2025 FUM and Dec 2024 FUM.