CHAKARA SISOWATH, chief investment officer at Comgest - a boutique, research-based institutional fund manager - believes in taking time over investment decisions. He says Comgest typically waits for between six and 18 months to buy a stock, once a company has been identified as an attractive target. 'We wait to see if our assumptions about the company are correct. Sometimes we might miss the first 20-50 per cent of the stock price rise, but we are very-long-term investors. If our assumptions and our scenario is correct - and if indeed the company can grow its earnings by 15 per cent every year - you can miss the first 30 per cent and you will get good performance anyway.' From Hong Kong, Comgest invests throughout Asia, including Japan. The firm has assets under management of about US$2.3 billion, of which about 40 per cent is managed in Hong Kong and the remainder in Europe. It picks stocks based on a five-year forecast of earnings and dividends. Unlike many other fund managers, Comgest generally shuns cyclical stocks, including property conglomerates, and avoids most of the financial sector. This is because of the difficulty it sees in forecasting the operating environment for banks and other financial companies. Illustrating this investment philosophy of sticking to the predictable, Comgest has Cafe de Coral in its Hong Kong stock portfolio, but not Cathay Pacific. Mr Sisowath says the fast-food chain has shown its talent in meeting customer tastes and sourcing low-cost products, while airlines, however well managed, operate in an uncertain market. Comgest has earned a reputation as a defensive investment house, according to Mr Sisowath. 'We want to control risk. We want to be really cautious investors, very defensive. So we want to be sure that a company we invest in delivers what it promises. In Asia there are a lot of companies promising to do a lot of things and there has been pretty poor execution. Sometimes it is because of poor markets, but sometimes they never had any intention of doing what they said. I think time is a good filter. That is why we never make fast investment decisions.' Within its restricted Asian investment universe, Comgest aims for a pool of about 40 investible stocks, although typically it holds only about 25. 'We have about 40 stocks on our radar screen which we follow at any given time, and maybe 20-25 qualify for our portfolio because of the prices they are trading at and so on. It is good to keep the number down because as analysts and fund managers we want to cover the companies very well and get to know management.' One unusual feature of Comgest is the dual roles played by its fund managers - they double up as investment analysts, carrying out company visits as well as initiating buy and sell recommendations. Mr Sisowath said his role as chief investment officer was far less autocratic than it might be in a bigger fund management house, where managers were expected to follow strict asset allocation guidelines. At Comgest, analysts/fund managers can investigate investment opportunities in any Asian country, including Japan, in any sector. For example, a South Korean insurance company has made its way into the portfolio by satisfying the firm's investment criteria, despite the general dislike of financial stocks. Mr Sisowath explained the stock-picking process: 'The manager will come and say: 'This company is interesting because it has this great product, or it has this great distribution network that nobody can copy. This gives it superior returns, or superior profitability.' 'Then we challenge each other. We try to find the weakness in the business model of that particular company. The person who is proposing the investment will prepare an earnings model and forecast and we try to find flaws in it. We try to test all the assumptions.' Once the analysts have agreed that the company could be an interesting investment target, Comgest does not buy the stock, but watches it for six to 18 months. 'We want to see if our assumptions prove to be correct,' Mr Sisowath said. 'We test whether the company told us the truth when we visited it, for example. It is quite a long process and every step of the way there could be disagreements. We try to get everyone to reach agreement on what really makes sense, what is reasonable, and to identify the risks we are willing to take.' Comgest was set up in 1986 by two fund managers from big French investment houses: Jean-Francois Canton, formerly with Banque Indosuez, and Wedig von Gaudecker, from Banque Paribas. 'They were fed up with working with big banks and decided to create a firm by fund managers for the benefit of fund managers without any of the bureaucracy and politics,' Mr Sisowath said. The overall performance target for Comgest funds is 15 per cent per year, but this should be measured over five-year periods, according to Mr Sisowath. 'The last three years have been pretty bad for equity markets. Our fund performance has been a little less bad than everyone else, but it has been bad nevertheless. But if you look at periods of five years, we are much closer to that target.' Comgest invests relatively heavily in China stocks, but only through the Hong Kong stock market because of concerns over accounting standards, transparency and corporate governance in mainland markets. 'We are very skewed towards China because we have a number of Greater China funds. Also, being based in Hong Kong we get a lot of information on China and it is very easy for us to go visit Chinese companies. It influences our ideas and we end up having more Chinese stocks than, say, Thai or Indonesian stocks.' Chakara Sisowath 1985: Graduated from business school in France before be coming a fund manager. 1992: Gained an MBA. Became a senior analyst at Fidelity Management & Research. 1995: Earned a CFA from AIMR. 1996: Became a senior analyst for Natwest Securities Asia. 1998: Head of research at Credit Lyonnais International Asset Management, Tokyo. 2001: Joined Comgest Far East.