Morningstar - Q1 2022 - 63

Why Did a Star Manager Take
His Boutique Fund Firm Public?
After stunning growth and
a successful IPO, what's next for
Rajiv Jain's GQG Partners?
Gregg Wolper
SPECIAL REPORT
record running international and emergingmarkets
portfolios for more than two decades. At
Vontobel, he rose to the level of co-CEO.
Mutual fund managers who leave large corporate
firms to start their own boutiques know there
are risks involved. Still, plenty have taken
the plunge. Some have succeeded, while others
have found the going rough. With thousands
of investment options clamoring for attention-
many backed by hefty advertising and
marketing budgets-it's exceedingly difficult
to stand out.
In just over five years, however, Rajiv Jain,
a former international-fund manager at Vontobel
Asset Management, has not only established
his own firm on a solid foundation but has seen it
grow far beyond his expectations (EXHIBIT 1 ).
At the end of October 2021, GQG Partners,
founded in mid-2016, had $90.4 billion in assets
under management.
This trajectory shouldn't come as a complete shock.
Although Jain is not a household name on the
level of a Peter Lynch or Bill Gross, he's well
known in advisor circles after building an enviable
Moreover, although they've hit a few bumps
in the road during the tumultuous market
since they launched, the two most prominent GQG
funds have posted index-beating performance
over their history (EXHIBIT 2 ).1
That said, even with the benefit of name
recognition and fine performance, accumulating
$90 billion in assets in less than five and a half
years is quite a feat. For the sake of comparison,
one can look at probably the most successful
shop (judged by level of assets) founded by a
manager who left an established firm: DoubleLine,
founded by former TCW bond-fund manager
Jeffrey Gundlach. That firm now has $137 billion in
assets but has been around more than twice
as long as GQG Partners. Another success story,
Causeway Capital Management, founded
by international-stock managers Sarah Ketterer
and Harry Hartford after leaving Hotchkis
& Wiley, boasts a collection of highly regarded
funds, but after 20 years, its $45 billion AUM
is just half of GQG's assets.
Even the enormously popular ARK Investment
Management, founded by Cathie Wood in 2014
after she left AllianceBernstein, had less than GQG
Partners ($78.9 billion) as of its most recent report.2
A Curious Next Step
Recently, GQG Partners diverged from the
path taken by most manager-founded firms. In
October 2021, it listed 20.1% of its shares on
the Australian Stock Exchange. However,
this move doesn't signal a major transition of
leadership or direction. Control remains
firmly in the hands of the founders. After the
listing, Jain holds 68.8% of the firm's shares, and
co-founder and CEO Tim Carver owns 5.6%.
Still, questions abound. Why go public? What are
Jain's plans for the firm? What does the IPO
mean for his own future? Should the resounding
success of GQG in such a short period, and
the bounty that's accrued to its founders as a
result, mean other managers should
contemplate building their own firms they can
then take public?
Surely managers considering such a step
couldn't help noticing that the 20.1% portion of
1 Goldman Sachs distributes GQG's broad international fund, with GQG serving as subadvisor, but Goldman Sachs is not involved in the fund's investment decisions.
2 Assets under management for GQG Partners, Causeway, and DoubleLine are from the firms' websites, with GQG's as of Oct. 31, 2021, and Causeway's and DoubleLine's as of Sept. 30, 2021.
The ARK figure does not seem to be available on the firm's website; the latest reported figure comes from ARK's March 2021 ADV Part 2 filing, which reports assets of Feb. 28, 2021. The
ARK figure includes $23.9 billion in nondiscretionary assets, a far greater percentage of nondiscretionary assets than the three firms above, all of which reported relatively small percentages
of nondiscretionary assets or none at all.
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63

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