A Peak Inside Portola Creek’s Investment Strategy
Going behind the scenes with our research partner Magni Global Asset Management.
Portola Creek’s foreign equity allocations are largely determined by Magni’s country Governance ratings.
Magni is the leader in country-level research on corporate governance — its core premise is Countries Matter(TM) when investing internationally. Magni developed its Sustainable Wealth Creation principles for good governance, which are based on widely-accepted economic concepts, by examining the accounting, legal, regulatory, adjudicative and economic structures of investible countries around the world. The firm’s extensive research database covers 12 Economic Standards, and contains data on 280 Qualitative Sovereign Factors collected over the past 16 years.
How can a country’s Governance be measured?
Two words that describe Magni’s point of view are transparency and honesty. Their research has shown that the more these factors apply with respect to a country’s citizens, businesses and investors, the more wealth that is created in that locale. Lending further support, studies have shown that nation’s that have an open, honest, and transparent economy outperform those that do not.
However, the fact that laws and regulations are on the books to ensure compliance does not mean they are enforced. Governance researchers need to look past official pronouncements and/or stated intentions to assess how businesses and government officials actually behave. In this respect, Magni stands out from other similar organizations in its ability to research and gauge this behavior.
How does country’s Governance impact company performance and investing opportunities?
In our view, assessments of a country’s ability to facilitate a high-quality corporate governance environment represent critical investment information. In places where such standards hold true, companies are able to create value for their shareholders without interference from either corrupt government officials or government-sponsored organizations. At Magni, they offer deep insights about governance in each of the world’s investible countries and rank them accordingly. Not surprisingly, their efforts have helped them to build a successful track record managing client portfolios.
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