3 Questions with Genuine Investors ETF (GCIG) Portfolio Manager, Guy Davis

While the Genuine Investors ETF (ticker symbol: GCIG) was only recently launched with its publicly-traded debut on December 1, 2021, its portfolio manager overseeing the fund, Guy Davis, has more than a decade of experience managing assets for institutions and high net worth clients.

Beyond his professional credentials as a CFA Charterholder, Guy has co-authored a highly rated book Navigating the Street: A Better Approach to Investing, gained recognition as a finalist for ‘Equity Income Fund Manager of the year 2017’, and was voted ‘Asset Management Top 40 under 40’ in 2015.

As portfolio manager and managing director of GCI Investors, we asked Guy to tell us a little more about the Genuine Investors ETF to help investors learn more about the fund.

📈 Get to Know the Genuine Investors ETF (GCIG)

This page is organized into sections to help you quickly find the information you need and get answers to your questions:

1. Q&A with Guy Davis, Manager of Genuine Investors ETF (GCIG)
2. Quick Facts About the Genuine Investors ETF (GCIG)
3. Get Answers to Your Questions About GCIG

– Q&A: Genuine Investors ETF (GCIG) –

Q: What would you like prospective investors to know about your investment philosophy before they invest in GCIG?

Guy: The first implication of our approach is that when applying such a threshold to business quality, the investable universe shrinks markedly. We believe that most businesses listed on the stock market simply do not meet the necessary requirements to be investable – indeed there are entire sectors and industries that we see as fundamentally unattractive long-term investment opportunities.

The second is that Genuine Investing requires understanding that underlying business value can be very different from a business’s stock price. We believe the reason for this disparity is simple in principle but often overlooked. In our view, real business value (whether private or public) is derived from the future cash flows that can be produced for the owners over the long run. It is something that while subjective, can be estimated within a reasonable range and changes little over days, months, or quarters.

Fundamentally, if you’re the owner of a business, your business is probably worth approximately the same today as it was six months ago. On the other hand, stock prices can be volatile with fluctuations as much as 50% in a quarter for no apparent reason.

Why the disparity? Because stock prices are driven by underlying business value plus many other factors. And those ‘other’ factors are typically short-term in nature, impossible to predict, and often irrelevant to real underlying business value.

Think of things like sentiment, asset flows, index inclusions, prices of other stocks, ‘style’ popularity, accounting rules, ratios, multiples, etc. There are hundreds of factors that drive stock prices up and down every day but have zero impact on the value of the underlying business. For us as Genuine Investors, we view this disparity between business value and stock price as a significant opportunity that can be exploited through a long-term mindset, with the view that over the long-run stock price and business value should converge.

Q: How are Environmental, Social, and Governance (ESG) factors taken into consideration in your management of GCIG?

Guy: We regard Responsible Investing as a core part of all genuine long-term investing and not as an addition to an investment process, nor as an additional threshold that needs to be met. In addition, we hold ourselves to an extremely high standard as stewards of our client’s capital.

Our approach is entirely fundamentals-based; rooted in a deep understanding of the individual company in question. We do not utilize many of the industry standard metrics or methodologies- we simply do not believe these are appropriate nor useful to genuine investors.

Large numbers of ‘ESG’ scores and metrics now exist that rank companies on all manner of different variables. Thousands of investment products (both active and passive) now invest solely on those scores, proudly displaying the words ESG or ‘Responsible’ in their marketing as they do so. In reality, these scores are mostly meaningless.

The problem is that ESG and Responsible investment characteristics are almost entirely qualitative in nature. As such, they cannot be ‘scored’ or ranked based on an algorithm. When you take something that is qualitative and subjective in nature and force it into a quantitative framework, you end up with an output that doesn’t have much real-life value.

To truly understand ESG impacts, investors must do the hard work of deeply analyzing the individual company and the industry as a whole. Only then is it possible to establish the real impact of ESG and Principles for Responsible Investing (PRI) principles. Ascribing a number or letter scoring system to such complex and qualitative variables simply misses the point and misses the real impact of these issues.

🎙️Podcast Alert: Listen to Guy Davis on the ValueWalk ValueTalks Podcast – Apple | Spotify

https://open.spotify.com/episode/2SZPHgWDgLm3VR9hJq1LKx?si=AbZ3hspPQK20GUtF8DtMvw&nd=1

📗 Quick Facts About the Genuine Investors ETF (GCIG)

Genuine Investors ETF Ticker:	GCIG
GCIG Issuer Website:	gci-investors.com
Wealthtender Profile Page:	GCI Investors
Portfolio Manager:	Guy Davis, CFA
GCIG Inception Date:	December 1, 2021
Actively Managed:	Yes

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