International Fund Spotlight: DBS Group Holdings Ltd
Continuing with our theme of investing in opportunities globally, specifically in Asia, we will take the opportunity to highlight one of our holdings in the International Fund, DBS Group Holdings Ltd. (SGX: D05). We have been long-term holders of DBS since first initiating the position in 2018.
Founded in 1968, DBS is the largest bank in Singapore, which is their primary market. They are, however, a global company with operations across several key Asian markets in addition to Singapore such as Greater China, India, and many other countries in Southeast Asia and around the world.
DBS has a strong banking franchise, using their scale to target many of the largest markets in Asia, providing a long growth runway for the company and international banking capabilities to clients. Over the past few years, the company has amassed a growing cash position, well above regulatory requirements, which they can now use to return to shareholders through increased dividends and buybacks of their shares. These qualities alone result in an attractive investment proposition; however, there are a couple of exciting parts of differentiation in the business that have made it an especially attractive opportunity:
- Digital Transformation: DBS is one of the leading global banks when it comes to technology and digitalization. Over a decade ago, management decided to focus the company’s efforts on building out technology capabilities internally, studying and learning from some of the world’s best tech companies such as Google and Amazon. Over the course of the digital transformation, they have built out capabilities to better leverage their data to drive higher growth while also driving efficiencies in their operations, keeping costs lower. This forward-looking investment has created a structural advantage over peers and has allowed DBS to gain share in their markets while delivering strong profits.
- Wealth Management & Private Banking: DBS has built a strong wealth management business, growing both income and assets under management for the last 5 years, at +11% compounded annually. This is done primarily through their Private Banking business, where they are one of the top players in Asia, targeting high net worth individuals. DBS benefits from opportunities as populations in their key Asian markets becoming wealthier, with more high net worth individuals expanding their potential customer base and existing clients becoming wealthier, and in turn, requiring higher levels of servicing.
“This means that” DBS is an example of a large, well established international company which we view to exhibit the same level of quality as well-known companies in North America. As with DBS, we continue to search globally for the best investment opportunities for the portfolios.
National Instrument 31-103 requires registered firms to disclose information that a reasonable investor would expect to know, including any material conflicts with the firm or its representatives. Doug Johnson and/or Pathfinder Asset Management Limited are an insider of companies periodically mentioned in this report. Please visit www.paml.ca for full disclosures.
Changes in Leverage. We are increasing the asset ceiling to 2.0 times the market value of equity for Pathfinder International Fund and Pathfinder Conviction Fund to be consistent with Pathfinder Partners’ Fund and Pathfinder Resource Fund.
For more information, please follow the links above to review the fund term sheets.
*All returns are time weighted and net of investment management fees. Returns from the Pathfinder Partners’ Fund and Partners’ Real Return Plus Fund are presented based on the masters series of each fund. The Pathfinder Core: Equity Portfolio and The Pathfinder Core: High Income Portfolio are live accounts. These are actual accounts owned by the Pathfinder Chairman (Equity) and client (High Income) which contain no legacy positions, cash flows or other Pathfinder investment mandates or products. Monthly inception dates for each fund and portfolio are as follows: Pathfinder Core: Equity Portfolio (January 2011), Pathfinder Core: High Income Portfolio (October 2012) Partners’ Fund (April 2011), Partners’ Real Return Plus Fund (April, 2013), and Partners’ Core Plus Fund (November 2014).
Pathfinder Asset Management Limited (PAML) and its affiliates may collectively beneficially own in excess of 10% of one or more classes of the issued and outstanding equity securities mentioned in this newsletter. This publication is intended only to convey information. It is not to be construed as an investment guide or as an offer or solicitation of an offer to buy or sell any of the securities mentioned in it. The author has taken all usual and reasonable precautions to determine that the information contained in this publication has been obtained from sources believed to be reliable and that the procedures used to summarize and analyze such information are based on approved practices and principles in the investment industry. However, the market forces underlying investment value are subject to sudden and dramatic changes and data availability varies from one moment to the next. Consequently, neither the author nor PAML can make any warranty as to the accuracy or completeness of information, analysis or views contained in this publication or their usefulness or suitability in any particular circumstance. You should not undertake any investment or portfolio assessment or other transaction on the basis of this publication, but should first consult your portfolio manager, who can assess all relevant particulars of any proposed investment or transaction. PAML and the author accept no liability of any kind whatsoever or any damages or losses incurred by you as a result of reliance upon or use of this publication.