Quality Without Borders: Inside the BCGD

Alongside questionable valuations in U.S. stocks, a global de-dollarization trend has more investors looking overseas for opportunities. This is an area where active managers have achieved a high performance success rate, according to the latest Morningstar US Active/Passive Barometer report. An active strategy offers inherent flexibility that a passive fund lacks, highlighting one of the advantages of BCGD. The fund’s managers specifically look at the portfolio’s holdings through a durability lens, seeking businesses that have progressed beyond the aggressive growth stage of their life cycle yet still offer long-term growth potential, rather than an index fund with a market-cap-weighted approach.

Managed by Alex Umansky and Guy Tartakovsky, BCGD employs a rigorous bottom-up research methodology, seeking companies exhibiting high quality characteristics. The active management approach allows Umansky and Tartakovsky to select holdings suited to a long-term investment horizon. Specifically, the team looks for durable growth companies that will likely capitalize on disruptive change. Compared with passive funds tied to an index, BCGD’s active approach allows greater flexibility in portfolio construction.

Regarding BCGD, the focus is on “high-quality compounders.” That includes businesses with open-ended growth opportunities, durable competitive advantages, and strong management, at attractive valuations relative to their estimates of intrinsic value. The result is a curated portfolio of companies capable of delivering significant value to shareholders and benefiting from compounding returns over time.

“We find companies across all sectors and on a global basis,” Umansky said in a portfolio manager’s Q&A. “The portfolio is highly concentrated in 30 to 40 companies at all times, with position sizes reflecting our level of conviction.”

“The ETF is appropriate for investors seeking to invest in the highest-quality growth businesses around the world with a lower risk profile,” he added.

With more investors looking for opportunities outside U.S. borders, BCGD can provide this level of global exposure. A global focus enables access to a wider pool of high-quality, durable businesses, and thus additional outperformance opportunities while diversifying across countries. As of March 5, here are some top holdings in the fund:

• The Semiconductor Backbone: Nvidia and Taiwan Semiconductor provide essential hardware for the next decade of digital growth. That growth especially applies to the artificial intelligence (AI) infrastructure buildout.
• Financial Focus: Holdings in Visa, S&P Global, and Brookfield Corp target exposure to companies owning proprietary data and critical financial networks.
• Global Consumption: Holdings like Amazon capture the resilience of global digital consumption and online retail.

When it comes to the aforementioned companies with global reach, BCGD provides a disciplined anchor. Seeking companies with long-term durability requires a highly selective management team with a deep well of market experience. They can mute the short-term noise to focus on identifying the market leaders of the next decade. Then they can capitalize on disruptive change.

“Our decades-long experience in being able to forecast long-term fundamentals of businesses should continue to enable us to analyze every organization with a long-term ownership mindset,” said Tartakovsky. “We focus on durable growth businesses and hold them for extended periods with the goal to never sell, whereas we find that many large-cap equity managers align their core strategies more closely with the benchmark.”

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