On March 8, 2021, Touchstone Investments launched their latest fund in partnership with Sands Capital, Touchstone Sands Capital International Growth (TCDYX).
Across their strategies, Sands Capital looks for businesses with the same six characteristics:
- Sustainable, above-average earnings growth
- Leadership position in a promising business space
- Significant competitive advantage/unique business franchise
- Clear mission and value-added focus
- Financial strength
- Rational stock market valuation relative to the market and business prospects
Their portfolios are typically concentrated in 25-40 names and are conviction-weighted so that the “best” stocks receive a greater share of the portfolio.
Sands Capital advises or sub-advises four other mutual funds, each of which have earned a five-star rating from Morningstar:
- Touchstone Sands Capital Select Growth
- Touchstone Sands Capital Emerging Markets Growth
- Sands Capital Global Growth
- Harbor Global Leaders
The Touchstone Sands funds typically work by taking successful strategies that Sands Capital had been managing on behalf of institutional or high net worth investors and making them available to the public. That’s the case here, too. The Sands Capital International Growth Strategy launched in 2018, making it Sands’ newest. It aims to take “an unconstrained approach to seeking the best growth businesses outside of the U.S.” The strategy has returned 31.5% annualized since inception, while its benchmark index returned 6.2%. That is a stunning gap. The strategy has a median market cap of $45 billion and an active share of 93, which signals an exceptionally high degree of independence from its benchmark.
The fund will be co-managed by Sunil Thakor (handsome devil in the checked shirt) and Ashraf A. Haque. Mr. Haque joined Sands Capital in 2008 after completing his MBA at Harvard. He serves as a co-portfolio manager of Sands Capital’s Emerging Markets Growth strategy and the Touchstone Sands Capital Emerging Markets Growth. Mr. Thakor joined Sands Capital as a research intern, became a full-time Research Analyst in 2006, co-manager of the Global Growth strategy in 2007, and manager of the Global Leaders strategy when it launched in 2017. Before joining Sands Capital, he was an analyst and an Associate at Charles River Associates, a strategic consulting firm.
Bottom line: Sands Capital is an exceptionally successful growth investor, whose strategies have succeeded across a range of markets. Despite a tilt toward stocks with above-average growth prospects, the funds have average to the below-average risk and an admirable consistency of performance. Venturesome investors looking overseas should consider adding Touchstone Sands Capital International Growth to their due diligence list.
The initial expense ratio is 0.98% and the minimum initial purchase requirement for “Y” shares is $2,500. The fund’s webpage is understandably thin (nothing yet about what the managers think or are up to) but the basics (factsheet, prospectus, SAI) are there and Touchstone has traditionally been a good communicator.