Long-Term Investing with Independent Franchise Partners

Independent Franchise Partners, a firm that was previously a part of Morgan Stanley, uses a unique methodology to invest in long-term returns from international shares. The firm's strategy focuses on identifying companies with strong franchises, favorable valuations, and sustainable sales. Managing Director Hassan Elmasry emphasizes the importance of management in creating value and the need for a capable team to sustain growth without relying on external factors.

Key Takeaways:

• The firm's investment process involves buying companies with strong franchises, favorable valuations, and high free cashflows.
• Independent Franchise Partners looks for companies with dominant intangible assets, high return on capital employed, and high free cashflows.
• The firm's portfolio is fully invested in global equities, with no significant regional or sector weightings.
• The fund's asset allocation is 1.38% of invested assets per year.
• The firm does not invest in mining companies and has a low turnover rate of about 15% per year.
• Independent Franchise Partners holds 30 companies in its portfolio and aims to maintain a concentrated portfolio with no more than 10% of the portfolio invested in any one company.

Statistics:

• The IFP Global Franchise Fund Australian component has $321 million under management at the end of August.
• The total funds under management globally are $US2.3 billion.
• The fund has returned 6% over the past 12 months for Australian investors.
• The three-year and 10-year performances of the fund are -3.4% and 2.8% respectively for Australian investors.
• The MSCI World Ex Australia index has returned a negative 4%, -12.4%, and -3.5% over the same periods.

Sources:

• Begun in 1996 as the Morgan Stanley Global Franchise Fund.
• Started trading under the name Independent Franchise Partners last year.
• Hassan Elmasry, Managing Director
• Mercer data for fund rankings
• Macquarie Professional Series for investor access