International equities are playing an ever more important role in global wealth management. Despite well-accepted economic principles about the role of economic infrastructure on equity valuations, most traditional investment analysis and products do not currently incorporate the information as it is not available in a consistent, usable format.
An iceberg is a metaphor for traditional investment analysis regarding international equities. Most international analyses parallel domestic analyses by focusing on the traditional metrics that are akin to the visible part of an iceberg. The hidden information is like the submerged portion of an iceberg. It is key to success (or even survival) but not readily discovered.
Magni Global Asset Management has a repeatable process for researching the economic infrastructure of countries and turning the research into investment information. Portfolios built by Magni using this process have demonstrated significant absolute and risk-adjusted performance for more than a decade using a rigorous forward-tested model.
Countries do matter when investing internationally and should be considered when making investment decisions. Further, the meaningful changes in the economic infrastructures means the country research should be continuously maintained.
Looking for more perspective on international investing? Download our whitepaper: “Country Selection – A Powerful Technique of International Equity Investing.”