Q1 2020

www.wealthandfinance-news.com 6 Wealth & Finance International - Q1 2020 International Reference in Wealth Management Julius Baer is a pure-play private bank, focused on servicing and advising both private clients and independent asset managers. Recently, the Global Excellence team of Julius Baer were awarded the accolade Best Portfolio Manager 2019 – Switzerland. Furthermore, the bank’s flagship equity fund - JB Equity Global Excellence (LU0912194841) has been selected as the best global large-cap blend equity fund (1 Year). The proud Global Excellence team of Bank Julius Baer reveals the secrets to their success. Over the last ten years, we have been diligent in offering our investors unique access to the world’s leading companies with strong business models in favourable industries. We are focused on companies managed by prudent capital allocators that have a strong focus on long- term value creation. Total capital returns can be maximised with high and improving free cash flow margins, which is a key metric to assess quality and intrinsic value of a business model. We assess a company’s potential through our proprietary investment process in combination with portfolio construction considerations. All these efforts aim to maximize the collection of the available equity risk premium for a given level of risk. Our companies must demonstrate high returns on capital through the entire economic cycle and Dec19191 Baris Pinar, Daniel Obradovic & Cesare Valeggia Bank Julius Baer & Co, Ltd. www.juliusbaer.com exhibit a rock-solid balance sheet. Investing in high return on capital companies with structural and cyclical growth drivers can help preserve and compound capital in good and bad times, whilst avoiding permanent capital impairments. Businesses that achieve a high return on capital are likely to have a special advantage of some kind. A high barrier to entry prevents or makes it difficult for new firms to enter a market and competing with other businesses. Even more importantly is the sustainability of these high barriers to entry, supported by aspects like strong brands, distribution advantages, business models, to name a few. Ideally, a high return on capital business do not require lot of reinvestments in order to grow the business, and consequently can easily finance incremental growth opportunities without tapping the capital market. We perceive structural industry challenges as a very important signal to sell stocks. Nothing lasts forever, so we are cautious about structural changes in the industries and keep a close eye on the core fundamentals of our stock holdings. Structural problems or turnarounds are explicitly avoided in our strategy. Turning around a struggling business is far from easy, and we refrain from being exposed to such companies for permanent capital impairment reasons. Another important aspect of our strategy is to avoid excessive financial leverage. The Global Excellence strategy aims to capture most of the market recovery by being fully invested, but also ensure that no company in the portfolio will go out of business should the next crisis occur. The goal of our sound investment process removes the need to predict market and moves portfolio positioning from speculation to investment.