Q:  What is your investment philosophy?

A: We are looking for companies that are able to grow at a faster rate than their peers and that also have a sustainable earnings growth of more than 10% in the trailing three years. As an International fund, we mostly focus on large cap companies and select midsized companies, especially if we believe they can grow to large cap companies. Consequently, we look to invest in companies with good profitability records, strong balance sheets and with earnings growth to sustain business development.

Q:  What kind of earnings are you looking for? How do you distinguish between different industries growing at the same rate?

A: When we look at earnings, we are looking at the drivers of earnings and free cash flow the company can generate. We are not very keen on having the cash flow distributed to shareholders if we believe the company can do better by investing it itself. We pay a close attention to earnings per share and to the ratio of stock price to earnings growth rate.

Earnings dynamics differs from sector to sector. Hence, when we look at companies, it is important for us to understand the underlying sector and the relevant earnings dynamics. For instance, retail is much different from technology or pharmaceuticals, so it is very important to stay in the framework and look at the company on a sector by sector basis when we look for ideas.

Q:  What is your investment strategy?

A: The fund has excelled whenever growth stocks have outperformed value stocks. Consequently, our investing strategy is to identify stocks that are in growth phase. We also believe that from 2007 we are at the beginning of a new trend where growth stocks are back in the forefront – a trend that has been underpinned by the growth, which is happening in emerging markets.

The Emerging markets we believe are in a multiyear secular growth trend. Though we primarily focusing on developed markets we want to benefit from these trends by also investing directly into the emerging markets.

We think that there are two secular trends that are going to last for years and affect emerging markets. There is a significant infrastructure development and consumer spending in these countries and we are trying to find ways to invest in these areas. Thus emerging market consumer and emerging market infrastructure are the two key themes in the portfolio and currently we have investments in India, China, Russia and Brazil.

The other way for us to participate is to find great companies in developed markets that are now replicating their success by moving heavily into emerging markets. Companies like Nestle, Swatch, LVMH, Holcim, Siemens and Vossloh are good examples for such strategies.

The broader investment strategy is to find those companies that, we believe, have superior brands which are working in attractive industries and are run by a great management, and have strong balance sheets to support 10% earnings growth.

We are also trying to identify companies that are in the process of restructuring, when we feel it will result in superior earnings growth afterwards.

Q:  Can you give us a few examples?

A: For example, where we found good growth stocks even in an anemic environment were German retailers. German Retail sales had been flat to down for 17 years but there were a few clothing retailers that figured out the German consumer by offering fashionable products at very convenient prices.

Both companies, namely H&M and Esprit are both double digit growers and are by the way successfully replicating their business model elsewhere. By the way both are non German companies. Esprit is actually traded in Hong Kong and generates more than 70 % of their business in Germany.

The second company, H&M is becoming an international powerhouse but Germany is still one of its core markets.

Q:  Can you give some more examples of stocks that you are excited about?

A: There are many more and like I said before we are excited about the Asian consumer and the emerging market infrastructure buildup. We hold Holcim, Vossloh, China Mobile, Swatch just to name a few. A name I would like to point out is Siemens. Besides its emerging market appeal it gets an extra kicker out of a new restructuring plan which should enhance operating margins considerably over the next years.

In the financial sector we have been worried about the European banks but like the stock exchanges. The biggest position we have is Deutsche Boerse - the German Stock Exchange - that has benefited from trading volume growth and market volatility. They have a new CFO; they’re aggressively trimming both workforce and costs and buying back shares, so they are taking all steps to extract more earnings. We also have a position in the Brazilian Stock Exchange and the Greek Stock Exchange.

Q:  How is your research process organized? Where do your ideas come from?