Investing alongside billionaires through the Excel Billionaire Leaders Fund

15 Oct, 2015 by Dwarka Lakhan

The multiple Lipper award-winning company Excel Funds Management Inc.’s (Excel) newest fund, the Excel Billionaire Leaders Fund, will invest in companies that are owned by billionaires – a rare group of individuals regarded as the best creators of wealth.

The fund is a global equity fund that invests in developed and emerging market companies to maximize returns and minimize risk. “While Canadian investors are familiar with many North American billionaires, the reality is that emerging markets are producing more billionaires today than developed economies,” says Bhim D. Asdhir, President and CEO of Excel Funds Management Inc. “Rapid urbanization is causing the shift in the wealth creation cycle, and Excel Funds, as an emerging market specialist, is well-positioned to capitalize on this shift for its clients,” he adds.

According to the Wealth-X and UBS Billionaire Census 2014, the world had 2,325 billionaries at the end of 2014, with a combined wealth of US$7.3 trillion, which would rank them third as a country in terms of gross domestic product, behind only the United States and China. Approximately, 500 these billionaires run publicly-traded companies.

The census found that in the U.S., technology produced the second highest number of self-made billionaires (27.3%) in the last two decades. The financial services sector produced 30% although financial services billionaires are less wealthy than their counterparts in the technology sector, with an average worth of $4.5 billion compared to $7.8 billion in the tech sector.

By contrast, over the past two decades, self-made billionaires in Europe and Asia were largely created by the consumer industry and have an average wealth of $5.7 billion. The second wealthiest group are entrepreneurs in the technology sector, which make up around 9.7% of the population and are, on average, worth $3.8 billion.

Nearly 20% of self-made billionaires in Asia come from the consumer industry, with an average wealth of $3.2 billion. The real estate sector produced the second-highest number of self-made billionaires (12.9%),with an average wealth of $2.7 billion.

Says Asdhir: “These self-made billionaires have collectively demonstrated vision, a work ethic and a tolerance for risk that go far beyond that of the average investor. They represent some of the best business minds in the world and are among the greatest creators of wealth. In rolling out Canada’s first Billionaires Fund, Excel aims to invest alongside the best of them and harness the earnings power of their talents.”

“We have analyzed each of the publicly traded billionaire companies around the globe and selected between 40 and 50 that are not only the best-run businesses, but also the most attractive investment opportunities, where the founding billionaire has a proven record of wealth creation and continues to build the company for future generations,” states Christine Tan, Senior Portfolio Manager with Excel Investment Counsel Inc., the Manager of the fund.

She looks for billionaire-owned businesses with free cash flow; solid financial productivity as measured by return on equity, return on assets, and return on invested capital; scalable business models and superior earnings per share growth, that are trading at less than intrinsic value.”

The fund manager will focus on long-term capital appreciation, using a disciplined stock selection criteria to invest in companies which have high growth potential and pricing power.

“Most billionaire owners have a lot of skin in the game and have more to lose than I do as a shareholder if they make a wrong decision,” Tan adds.

Among the fund’s top holdings are Canada’s convenience-store operator Alimentation Couche-Tard Inc., the Chinese tech giant, Tencent; the South African pharma company, Aspen Pharmacare; and the U.S. coffee giant, Starbucks.

Management fees for the adviser series of the fund is 2.0 per cent with a minimum investment of $250.

Dwarka Lakhan

Dwarka Lakhan is a pioneer in emerging markets journalism in Canada. His first emerging markets article, “Africa Joins Ranks of the Emerging,” appeared in Investment Executive, Canada’s leading newspaper for financial advisors, in September 1994. Since then he has written hundreds of articles on the full spectrum of emerging markets and has conducted more than two thousand interviews with emerging and frontier markets investment professionals.