Exciting investment opportunities with award-winning global value investor Sarah Ketterer

Consuelo, if there was a maxim, a single one that could guide investing, especially value investing, I'd yearn for it, but there isn't.

Sometimes a cigar butt is just exactly what you need.

A company that is trading at such a low valuation that ideally everything that can go wrong has gone wrong, and we see those.

And especially if the company's on the on the upswing to the degree they can generate cash and repurchase shares, that starts to guarantee a return.

So we can forgive maybe imperfect management or the business isn't well positioned in its industry.

If it's blindingly cheap, that's worthwhile.

But you might blend that, as we would in a portfolio, with companies that are just better placed.

They may have one or two competitors.

They're in an oligopoly.

And we're willing to pay a little more for that because we can be very confident that business is going to continue to have pricing power and deliver earnings and cash flow.

What is the value investing landscape now? You run global funds, you run the International Value Fund, your flagship fund.

What are the opportunities out there now? Is it easier, more difficult, challenging? The

sea change that has occurred, Consuelo, is the return to positive real interest rates in most regions around the world.

And this happened in 2022, in March, in the case of the US.

And with the rising rates and anticipation of rates staying at these levels until inflation, according to central bank measurements, have reached sustained lower levels, This is fantastic for those of us who use valuation tools because all the stock is in its share price should encapsulate, it's the present value of all the cash it can generate into the future, discounted to present.

And now, and this has been true for 18 months, cash is very meaningful.

So we're thriving, especially outside the U.S. market where value has been amply rewarded.

2023, for example, was a year for value outside the U.S.

How much more difficult is it as an investor to compete against the returns that are available on cash and in fixed income?

Cash is delivering a return still less than stock markets around the world.

And with active stock selection, we think we can beat that handily.

And we should, because investing in equities is definitely riskier than owning cash, no doubt about it.

The equity risk premium, the additional return you as investor should receive for taking that risk, should be at least three or four percentage points more than, say, 10-year bond yields.

So we need to deliver 7%, 8%, 9% returns per annum in order to satisfy investors and compensate them for risk.

And how difficult is that, Sarah, to deliver those kinds of returns at this point? As you said, the markets have done extremely well in 2023.