Rondure Global Advisors Takes on the World
'For women to be represented and have visibility in this industry is a success.'
Editor's note: This article first appeared in the Q4 2021 issue of Morningstar magazine. Click here to subscribe.
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When Laura Geritz founded Rondure Global Advisors in 2016, she became the change she wanted to see in the world.
Geritz had built a successful career in the asset-management industry, starting in client services in 1997 and then moving to the investment side a couple of years later. Her path eventually took her to Wasatch Global Investors in Salt Lake City in 2006. There, she made a name for herself as a small-cap global stock investor as a manager on Wasatch Emerging Markets Small Cap WAEMX and two other funds.
Despite her success, Geritz says, “I was frustrated. The industry didn’t look a bit different in terms of diversity and inclusion than it looked in 1998. If anything, it had taken a step back. I want to take a more feminist approach.”
Geritz had set out on her own before, when she picked up a backpack and headed to Japan to teach English in the countryside after graduating from college. That path led her to a master’s degree in East Asian languages and culture, and eventually her career in international investing.
Geritz says she isn’t an entrepreneur by nature, however. But she found a ready source of support from Grandeur Peak Global Advisors, another Salt Lake City firm founded by Wasatch alumni. (Grandeur Peak’s first funds were profiled here in the August/September 2012 issue.) Grandeur Peak has a minority stake in Rondure and provides trading, compliance, and back-office support.
Meanwhile, Geritz brought to the table her proven investing process and a desire to center the client experience. In May 2017, the firm launched Rondure New World RNWIX and Rondure Overseas ROSIX and made the lower-cost institutional shares accessible to individual investors with minimum investments of only $1,000.
As for the name, rondure is French for spherical. Geritz came upon the word in Walt Whitman’s “Passage to India” and felt it encapsulated the firm’s mission to search the globe for investments.
Teambuilding "Feminism isn't about men against women; it's about creating collaborative teams," says Geritz, paraphrasing an idea from Isabel Allende's latest book, The Soul of a Woman.
Her first hire, Blake Clayton, joined Rondure as an analyst in 2017 and today serves alongside Geritz as co-chief investment officer. A former academic, Clayton decided he preferred a hands-on approach after an internship at a bank in the roiling markets of 2007–08. He started his investment career at Citigroup C, then was introduced to Geritz by a friend who’d been at Wasatch and described her, Clayton recalls, as “the person whose team you wanted to be on.”
When Lydia So joined Rondure in 2020, her portfolio manager credentials were well established. During her 15-year tenure at Matthews Asia, she led Matthews Asia Small Companies MSMLX (now Emerging Markets Small Companies) from its 2008 inception to her 2020 departure and comanaged two other offerings. So says she felt a connection with Geritz even before they met because of their similar approaches to investing.
“We knew of each other in the industry, and we owned a lot of the same stocks. We’re both introverted and not likely to reach out,” laughs So, “but thank goodness a mutual friend connected us last year. We just hit it off, and here I am.”
Jennifer McCulloch Dunne signed on with Rondure as a partner in 2021; she and Geritz together are now the majority owners. McCulloch Dunne started her investment career at Mellon’s Founders Asset Management, where she first met Geritz, and then spent 15 years at Cambiar Investors as part of the international equity team that runs Cambiar International Equity CAMYX.
“It was time for a new challenge. I wanted to build something from the ground up and to be at a majority woman-owned firm,” McCulloch Dunne says. “It’s so meaningful in our industry; we’re still only 10% when we show up at meetings.”
Together Apart The team members work from separate home bases—Geritz in Salt Lake City, Clayton in San Clemente, California, So in the San Francisco Bay area, and McCulloch Dunne in Denver—and collaborate via email and videoconferencing.
This arrangement was not designed just for safety and convenience during the pandemic, Clayton says: “The remote setup has allowed us to build this team of experienced people who might not have been able to rearrange their lives to get to an office in the same place every day.”
Says Geritz, “We can accelerate diversity and inclusion by having a more flexible work culture.”
Geritz adds that working outside the office has always come with the territory for international investors, given time spent on the road around the world for research trips. She and her husband have an apartment in Kyoto, Japan, which serves as a base for her regular trips to Asia.
Geritz and So focus on the New World fund, an emerging-markets strategy, while Clayton and McCulloch Dunne focus on Overseas, which invests in developed markets. All four serve as analysts who contribute to both strategies as generalists. They come together for Friday meetings to review the stocks in the portfolios and on their watchlist and to hash out their differences.
McCulloch Dunne says these meetings bring to mind the lively dinner-table debates of her childhood: “We’re not trying to one up each other. These discussions are fun. At the end of the day, we all want the stock to go up more than our benchmark.”
Deliberate Steps The crux is a systematic process that keeps the team on the same page and speaking the same language. The goal, Clayton says, is to build portfolios of companies "with an enduring moat and exceptional financial characteristics."
The first step is a quantitative screen of the thousands of global stocks with market caps larger than $1.5 billion. After sifting for strong balance sheets, reliable cash flows, and consistent earnings growth, about 1,000 names make the cut.
Qualitative assessments cut that number in half. Companies must demonstrate a strong moat, or competitive advantage, by scoring well on what Rondure terms CGP metrics: club, or whether the business is in a market that’s tough to penetrate; glue, meaning customers are brand-loyal or face switching costs; and platform, or mechanism for controlling a valuable network.
Many of the names that meet these standards are consumer companies, which are the “heart and soul” of Rondure, Clayton says. About 50% of both funds were in the consumer staples and discretionary sectors combined as of midyear.
“Some of these brands have existed for more than 100 years, which is a testament to the moat for those companies.” He points to Heineken HEIA and LVMH MC as “great global consumer stories.”
Similar themes are echoed in both portfolios. The Overseas fund holds German companies Adidas ADS and Puma PUM in its top 10, for example, while one of New World’s top holdings is China’s Anta Sports Products 02020.
Both funds are also positioned to benefit from the global chip shortage. New World’s top holding is Taiwan Semiconductor Manufacturing 2330. It’s been in the fund since 2017, and Geritz added to the position when the sector was in a cyclical slump in 2019. While the stock has soared since, she says, “there are a lot of new avenues for demand for the semi-conductor space, and it’s become perhaps less cyclical.”
Overseas has positions in ASML ASML and Melexis MELE. Clayton calls the latter “an exceptional little company out of Belgium that specializes in semiconductors for autos—and emblematic of our small-cap expertise.”
Rondure’s qualitative assessment also incorporates an environmental, social, and governance framework that evaluates country risk. (Geritz serves on the global policy reference group for the United Nations Principles of Responsible Investment.) Rondure terms this ESG analysis CGP2—it encompasses credit, geography, politics, and people. This country assessment provides a framework for evaluating companies.
Differences in country focus may help explain why Rondure Overseas currently earns a Morningstar Sustainability Rating of 4 globes, while the New World fund earns 2. Both funds are evaluated within the same broad large-cap Morningstar global category, but the emerging-markets portfolio shows higher relative ESG risk. (Both funds earn Morningstar Low Carbon Designations, however.) Rondure’s goal is ongoing dialogue with company management and iterative improvement on ESG issues.
“I grew up in Hong Kong, a tiny city-state, so I have always been outward looking and aware of global context,” So says. “Having an understanding of the local situation is important when it comes to sensitive topics like this.”
After the qualitative evaluation, the team constructs and monitors portfolios of 80–125 stocks, using a proprietary model to project five-year profitability and assess relative valuation. Ongoing due diligence alerts them to key changes to a thesis. For example, they sold longtime holding Starbucks SBUX when the company took on debt to buy back shares.
The portfolio profiles don’t align neatly with standard benchmarks or category averages. The funds have more in smaller- and mid-cap names and different country focuses. For example, New World had less in China than the MSCI Emerging Markets Index as of midyear, and twice the stake in India, where companies are more likely to do well on Rondure’s screens.
Liquidity is not as abundant in India as it is in China, So says, which means companies tend to have better balance sheets: “When capital is scarce, you have a pool of management teams that can run a company profitably.”
The Measure of Success Geritz says clients should continue to expect higher tracking error than most firms. The goal is to outperform over a full market cycle while keeping risk in check. So far, New World's returns have been competitive within the diversified emerging-markets category, while the Overseas fund has not quite kept pace with the average foreign large-growth category.
“Don’t expect us to knock the ball out of the park in a raging bull market,” McCulloch Dunne says. “But we will mitigate downside risk better than most. It shows up in the numbers.” Indeed, both funds have Morningstar Risk ratings of Low relative to their Morningstar Category peers.
The firm has drawn more than $300 million in assets under management so far, the bulk of it directed to the New World fund. “People trust us to approach emerging markets in a way that allows them to sleep well at night,” Geritz says. “And there’s the greater good we want to accomplish as well.”
The young firm has already contributed to that greater good, So says: “I’ll speak for Laura, as she’s very modest. She’s already had success as a change agent in the industry. For women to be represented and have visibility in this industry is a success.”
Laura Lallos is managing editor of Morningstar magazine.
Photography by David Lees.