I. General Disclaimer

PLEASE READ THIS IMPORTANT INFORMATION BEFORE PROCEEDING FURTHER.

This page contains legal and regulatory notices relevant to the information contained on this website. By accessing the site you agree to be bound by the following terms and conditions.

The information on this site ("Information") is provided for general information and is not an offer to sell, or a solicitation of any offer to buy, any interest in the investment funds managed by Chikara Investments LLP (the "Chikara Funds"). In particular, this website is not intended as marketing of any Chikara Fund in any member state of the European Economic Area for the purposes of the EU Directive 2011/61/EU on Alternative Investment Fund Managers.

II. Information on this Site

The Information is issued by Chikara Investments LLP, a limited liability partnership incorporated in England and Wales under number OC310342 ("Chikara"), authorised and regulated by the Financial Conduct Authority ("FCA").

The Information is not directed at any person in any jurisdiction where it is illegal or unlawful to access and use such information. Chikara disclaims all responsibility if you access or download any Information in breach of any law or regulation of the country in which you reside.

The Information is not directed at any person in the United States and this site is not intended to be used by any person in the United States other than persons who are "qualified purchasers" (as defined in the United States Investment Company Act of 1940, as amended) and/or "accredited investors" (as defined in Rule 501(a) under the United States Securities Act of 1933).

Accordingly, all persons who access this site are required to inform themselves of and to comply with all applicable sales restrictions in their home country.

Compliance with Certain Restrictions Relating to the Chikara Funds

SWITZERLAND

Apart from as noted below, the Chikara Funds have not been and cannot be registered with the Swiss Financial Market Supervisory Authority (FINMA) and cannot be distributed in Switzerland.

Chikara Funds plc, one of the Chikara Funds, may be distributed in Switzerland to both non-qualified investors and qualified investors.

The representative in Switzerland is 1741 Fund Solutions Ltd, Burggraben 16, CH-9000 St. Gallen. The Swiss Paying Agent in Switzerland is Tellco Ltd, Bahnhofstrasse 4, CH-6430 Schwyz. The prospectus, the articles of association, the Key Investor Information Documents, as well as the annual and semi-annual reports in relation to Chikara Funds plc, may be obtained free of charge from the representative. In respect of the units distributed in and from Switzerland, the place of performance and jurisdiction is the registered office of the representative.

III. No Advice

The Information is provided for informational purposes only and on the basis that you make your own investment decisions and do not rely upon it. Chikara is not soliciting any action based on it and it does not constitute a personal recommendation or investment advice. Users of this website should be aware that Chikara is not acting for, or advising them, and is not responsible for providing them with the protections available under the UK regulatory system to those who are clients of Chikara. Compensation will not be available from the UK’s Financial Services Compensation Scheme. Should you have any queries about Chikara Funds, you should contact your financial adviser.

IV. Accuracy of Information

The Information (including any expression of opinion or forecast) has been obtained from, or is based on, sources believed by Chikara to be reliable, but is not guaranteed as to its accuracy or completeness and should not be relied upon. The Information is provided without obligation on the part of Chikara and on the understanding that any person who acts upon it or changes his investment position in reliance on it does so entirely at his own risk. The Information does not constitute an offer to buy or sell or an invitation to make an offer to buy or sell shares in any Chikara Fund.

Information is current only as at the date it is first posted and may no longer be true or complete when viewed by you. All Information may be changed or amended without prior notice. Chikara does not undertake to update this site regularly.

V. No Liability

No representation, warranty or undertaking is given as to the accuracy or completeness of the Information by Chikara or any of its associated companies and no liability is accepted by such persons for the accuracy or completeness of such Information. In no event will Chikara or any of its associated companies be liable to any person for any direct, indirect, special or consequential damages arising out of any use of the Information, or on any other hyper-linked site, including, without limitation, any lost profits, business interruption, loss of programs or data on your equipment, or otherwise, even if Chikara is expressly advised of the possibility or likelihood of such damages.

You should be aware that the Internet is not a completely reliable transmission medium. Chikara does not accept any liability for any data transmission errors such as data loss or damage or alteration of any kind, including, but not limited to any direct, indirect or consequential damage, arising out of the use of the products or services referred to herein.

The above provisions are not intended to exclude or restrict any duty or liability that Chikara has to its customers under the regulatory system in the United Kingdom.

VI. Indemnity

You agree to indemnify, defend, and hold harmless Chikara, its affiliates and licensors, and the officers, partners, employees, and agents of Chikara and its affiliates and licensors, from and against any and all claims, liabilities, damages, losses, or expenses, including legal fees and costs, arising out of or in any way connected with your access to or use of this website and the Information.

VII. Material Interests

Chikara and its partners, officers and/or employees may have holdings in the Chikara Funds and may otherwise be interested in transactions that you effect in those funds.

VIII. Linked Websites

This site may be linked to third party websites or contain information provided by third parties. Chikara does not make any representation as to the accuracy or completeness of such websites or information, has not and will not review or update such websites or information, and cautions browsers that any use made of such websites or information is at their own risk. Chikara does not accept any liability arising out of the information contained on any linked website or Information provided by a third party and the use of such sites and information is at your own risk.

IX. Copyright, Trademarks and Other Rights

Copyright, trademarks, database rights, patents and all similar rights in this site and the information contained in it are owned by Chikara, its licensors or relevant third party providers. You may use the Information and reproduce it in hard copy for your personal reference only. The Information may not otherwise be reproduced, distributed, stored or transmitted without Chikara’s written consent. Nothing on this site should be considered as granting any licence or right under any trademark of Chikara or any third party.

X. Governing Law

You agree that your use of this site and any dispute arising from the use of this site is subject to English law and you submit to the jurisdiction of the English courts.

XI. Privacy, Data Protection

Chikara is committed to safeguarding the personal information which you may provide to Chikara through this site and to the extent that Chikara collects any personal information, Chikara will hold it in confidence in accordance with the General Data Protection Regulation (Regulation (EU) 2016/679).

For further information on how we safeguard the personal information which you may provide to Chikara please see our Privacy Notice.

XII. Use of Cookies

Chikara uses cookies on this site. By using this site, you agree to the placement of certain cookies on your computer. Please see our cookie policy for more information. If you do not wish to accept cookies from this site, please either disable cookies or refrain from using this site.

A "cookie" is a piece of information that is saved to your computer's hard disk by the web server. Confirmation of reading and accepting these terms and conditions will place a cookie on your computer's hard disk. This will ease your navigation around this website by not popping up these terms and conditions again during this browser session. This cookie is temporary and will be removed when you close your browser. The cookie is not used for any other reason. You may set your browser to notify you when you receive a cookie. Many web browsers allow you to block cookies. If you do block cookies you may not be able to access certain parts of this website. You can disable cookies from your computer system by following the instructions on your browser or at www.allaboutcookies.org.

The Importance of an Oath

  • Mar 2024
  • | Jonathan Asante
  • | Global Emerging Markets team

“Show me the incentive and I will show you the outcome”. Charles Munger

When describing how we invest for clients we often try to start off with our team’s oath which is shown below.  The oath was the idea of a former colleague many years ago and the reason we highlight it is we feel it is key to understanding how we were able to deliver long term acceptable results for our clients in the past. Put simply it was because we put our clients’ long-term interests ahead of our own.

This meant not buying the many companies which became temporarily popular in Global Emerging Markets (“GEM”) indices over the decades in favour of ones which we felt were more likely to offer far stronger returns (and lower risk) in the long term.   It meant closing funds in 2013 rather than investing in a set of large lower quality companies for clients.  And it meant writing letters and telling clients when we felt the returns might no longer justify the risk of investing in even the best set of companies in places like Latin America or China.

We continue to review how to best prioritise clients’ interests. This starts with the work we conduct before we make investment decisions for clients.  We undertake all our own analysis because we aim to invest in companies for the long term.  The short term-driven views of investment bankers are not greatly useful to do this.  We are happy to share our work in person with clients and discuss the pros and cons of all investments made on their behalf.  

Taking care of clients’ interest naturally extends to how we charge you relative to ourselves. We seeded the Chikara Global Emerging Markets (“GEM”) Opportunities fund with our own money in the most expensive share class, which feels like the right thing to have done.  All clients can access cheaper share classes. The last two decades offer numerous examples where financial misalignment delivered poor outcomes.  We believe that properly deferred remuneration is a powerful way to align client and fund manager interests. Lastly, we feel it is in clients’ interests to have as flat a team structure as possible so aim to share equally in the earnings because hierarchy in investment teams creates unnecessary distraction.

The GEM team’s Oath for Financial Stewardship

 In the daily course of working in funds management the EM team will endeavour:

  • To put clients' interests ahead of our own and to treat others as we would wish to be treated
  • To recognise that business conduct should reflect how we invest clients' money
  • To focus on the long term because nothing enduring can be created in the short term
  • To launch funds offering acceptable long term return prospects for clients after fees
  • To admit our mistakes
  • To strive to keep a balanced view and avoid falling victim to investment fads and fashions
  • To focus in conversations with clients just as much on what could go wrong as could go right
  • To remember capital preservation is as important in achieving client returns as capital growth
  • To advocate where possible for financial sector reform to further the aims above

The Opportunity as We See It

We have written at length on how we invest in companies operating in lower income countries and there are several written pieces on the Chikara website addressing issues that may be of interest to clients.  Over the last two decades we have narrowed down the investible universe of emerging markets to a small group of companies in which we have a high degree of confidence long term, and we invest only when we estimate they can provide acceptable returns for the risk we are taking in owning them.  The companies are based all over the developing world, a few are even based in the developed world (but possess large GEM businesses).   We have been waiting for many years for share prices of some to fall to levels that we believe provide an attractive investment opportunity. The reason we launched a fund last November was because we felt enough now did so.  

It makes little sense from an investment viewpoint to have all clients’ money exposed to simply one country as things can always go badly wrong with even the strongest looking set-up.  Diversification therefore plays a role in how we make decisions, but over or underweighting countries does not.  This is because in the past, we have benefitted as a few well-run companies in countries like Chile, South Africa, or Brazil, performed better than ones we would never own in countries like China and India.  Our approach therefore has little to do with predicting flows of capital affecting large indices and everything to do with the operating performance of specific companies over five to ten year periods.

We offer no forecast as to where GEM markets or indices will go.  We do not believe the future is greatly forecastable and we have never believed indices to be an effective representation of the GEM opportunity.  At 95% (March 2024), the active share of the fund suggests that we have fully backed these beliefs in the 30 portfolio holdings (March 2024).  We would hope we have already proved in the past that a portfolio of the best quality GEM companies can offer acceptable returns for clients while making more money with lower risk than the GEM index in the long term.  For us, a minimum long-term return threshold of 10% per annum at the portfolio level seems sensible for the risk being taken.  A hundred dollars grown at 10% per annum is worth USD 259 dollars in ten years’ time and USD 673 in twenty.  Many of our biggest holdings could offer far higher returns than this if those running the companies do a decent job.

Whatever the future holds will be navigated by those running the companies in which we invest.  Because of this we focus on their competence, integrity, and risk awareness before we even start to look at business franchises and stock market valuation.  We also try to apply this harsh lens to ourselves as far as is possible with varying degrees of success. Ultimately, we know that clients will be the best judge of whether they can trust us with their money and all we can do is behave in a manner consistent with our beliefs.

Important Information

This document does not purport to provide investment advice and should not be relied on for the purposes of any investment decision. It is not an offer to sell or the solicitation of an offer to purchase shares. In particular this document is not intended for distribution in the United States or for the account of U.S. persons (as defined in Regulation S under the United States Securities Act of 1933, as amended (the Securities Act)) except to persons who are "accredited investors" (as defined in Rule 501(a) under the Securities Act).  Chikara Investments LLP (Chikara) is not registered with the United States Securities and Exchange Commission as an investment adviser.  This document and its contents are confidential and must not be copied or otherwise circulated to any other person. Certain assumptions may have been made in the calculations and analysis in this document which have resulted in returns detailed herein. This document is based upon information which Chikara Investments LLP (Chikara) considers reliable, but no representation is made that it is accurate or complete and nor should it be relied upon as such. All information and research material provided herein is subject to change and this document does not purport to provide a complete description of the funds, securities or other investments or markets referred to or the performance thereof. All expressions of opinion are subject to change without notice. This document is issued for the purposes of section21 of the Financial Services and Markets Act 2000 by Chikara Investments LLP (Chikara), 31-32 St. James’s Street, London SW1A 1HD, who are authorised and regulated by the Financial Conduct Authority.