Partner, River Valley Asset Management

River Valley Asset Management

Partner

Singapore-based boutique asset management firm

River Valley Asset Management is a Singapore-based boutique asset management firm. Our team at RVAM strongly believes in being a trusted steward of our clients' wealth across generations.

Each of our fund managers has years of rich portfolio management experience over multiple market cycles at world-class investment houses. We bring our clients the combined strength of our investment team to manage their financial portfolios and to provide bespoke guidance on all aspects of their financial health.

We offer multi-asset class expert investment advice to accredited investors who are family offices, high net worth individuals and institutional investors to preserve and grow our clients' wealth.

The fund management team of the company includes Homiyar Vasania, Anand Ramachandran and Jamshed Desai.

MSCI Emerging Markets ESG Leaders Index / ESG

The investment industry is used to trends coming and going; the fundamental precepts that we follow, however, have remained the same, i.e. buying a company which can generate wealth over the long run, at the right price. Many a time market fads pick up one premise and place excessive emphasis on it before moving on to the next trend. Occasionally, however, some of these trends become entrenched and end up getting absorbed into the core principles as the marketplace evolves in response to a changing environment. ESG is one such concept. It has always been lurking in the background in some form or the other but is now making its presence felt at the forefront of the investment decision making process.
&nbsp;&nbsp;
For more than half a century the corporate landscape, initially in the Western world and later increasingly around the world (as globalization spread), revolved around the primacy of shareholder wealth maximization (The Friedman Doctrine). This has sometimes led to extreme outcomes and occasionally scandals. But as economies have evolved, the recognition of corporate responsibility and its impact on society have come to the forefront, resulting in a re-evaluation of the rules of engagement of companies with all stakeholders. We at <a href="https://www.rivervalleyasset.com/investment-insights/" target="_blank" rel="noopener">RVAM</a> believe that we are in the midst of seeing a fundamental shift taking place in the framework of principles around which corporates are organized and based on which they engage with stakeholders. Investors are increasingly recognizing this and are often actively involved in shaping this evolving paradigm.
&nbsp;&nbsp;
The clarion call for this was the statement issued on August 19, 2019 by a group of top U.S. CEOs, part of non-profit grouping, <a href="https://www.businessroundtable.org/business-roundtable-redefines-the-purpose-of-a-corporation-to-promote-an-economy-that-serves-all-americans" target="_blank" rel="noopener">The Business Roundtable (BRT)</a>, announcing a new purpose for the corporation. They explicitly stated that “no longer do corporations exist principally to serve shareholders” and also outlined a modern standard of corporate responsibility “for the benefit of all stakeholders.''&nbsp;
&nbsp;
Writing about <a href="https://www.smartkarma.com/insights/corporate-governance-and-asian-challenges" target="_blank" data-smartkarma-citation="insights:13509" rel="noopener">Corporate Governance and Asian Challenges</a> in our <a href="http://www.rivervalleyasset.com/qql/slot/u1112/September%202017%20-%20Corporate%20Governance%20and%20Asian%20Challenges.pdf" target="_blank" rel="noopener">September 2017</a> newsletter, we mentioned that our core objective when investing assets is to protect capital and earn a reasonable return without taking excessive risk. Within that framework, we look at ESG issues as risk factors which need to be identified and evaluated to ensure that investment objectives of our clients are achieved. The investment case for every security has two aspects – one, the ability of a company to generate cash flows and use them to grow the business and second, the risk ascribed to the cashflow stream by the market and the consequent risk premium used to discount it. In some industries ESG issues can be a cost of doing business and result in a lowering of the future free cashflow generating ability of a company. In others it may be more about risk management and ensuring that social issues (like health and safety, diversity, labour practices) do not become a reputational issue that are not properly captured when evaluating financial metrics. Ultimately, as investors, we need to be confident that we are getting adequately compensated for the risk taken with the underlying investments. Predictability, a key focus of our investment discussion, requires us to evaluate all future risks and be able to quantify the potential impact. Read more in the attachment or visit our website :- <a href="https://www.rivervalleyasset.com/the-evolving-paradigm-of-esg/" target="_blank" rel="noopener">https://www.rivervalleyasset.com/the-evolving-paradigm-of-esg/</a>

The investment industry is used to trends coming and going; the fundamental precepts that we follow, however, have remained the same, i.e. buying a company which can generate wealth over the long run, at the right price. Many a time market fads pick up one premise and place excessive emphasis on it before moving on to the next trend. Occasionally, however, some of these trends become entrenched and end up getting absorbed into the core principles as the marketplace evolves in response to a changing environment. ESG is one such concept. It has always been lurking in the background in some form or the other but is now making its presence felt at the forefront of the investment decision making process.
&nbsp;&nbsp;
For more than half a century the corporate landscape, initially in the Western world and later increasingly around the world (as globalization spread), revolved around the primacy of shareholder wealth maximization (The Friedman Doctrine). This has sometimes led to extreme outcomes and occasionally scandals. But as economies have evolved, the recognition of corporate responsibility and its impact on society have come to the forefront, resulting in a re-evaluation of the rules of engagement of companies with all stakeholders. We at RVAM believe that we are in the midst of seeing a fundamental shift taking place in the framework of principles around which corporates are organized and based on which they engage with stakeholders. Investors are increasingly recognizing this and are often actively involved in shaping this evolving paradigm.
&nbsp;&nbsp;
The clarion call for this was the statement issued on August 19, 2019 by a group of top U.S. CEOs, part of non-profit grouping, The Business Roundtable (BRT), announcing a new purpose for the corporation. They explicitly stated that “no longer do corporations exist principally to serve shareholders” and also outlined a modern standard of corporate responsibility “for the benefit of all stakeholders.''&nbsp;
&nbsp;
Writing about Corporate Governance and Asian Challenges in our September 2017 newsletter, we mentioned that our core objective when investing assets is to protect capital and earn a reasonable return without taking excessive risk. Within that framework, we look at ESG issues as risk factors which need to be identified and evaluated to ensure that investment objectives of our clients are achieved. The investment case for every security has two aspects – one, the ability of a company to generate cash flows and use them to grow the business and second, the risk ascribed to the cashflow stream by the market and the consequent risk premium used to discount it. In some industries ESG issues can be a cost of doing business and result in a lowering of the future free cashflow generating ability of a company. In others it may be more about risk management and ensuring that social issues (like health and safety, diversity, labour practices) do not become a reputational issue that are not properly captured when evaluating financial metrics. Ultimately, as investors, we need to be confident that we are getting adequately compensated for the risk taken with the underlying investments. Predictability, a key focus of our investment discussion, requires us to evaluate all future risks and be able to quantify the potential impact. Read more in the attachment or visit our website :- https://www.rivervalleyasset.com/the-evolving-paradigm-of-esg/

In a period where the financial press is inundated by coverage of rising global uncertainty, whether due to a recalcitrant northern regime playing with forbidden toys or the rapidly falling hopes of an investment-led US boom or the catch-22 bind European policy makers find themselves while setting monetary policy, we are focusing on a more mundane but pertinent issue for day-to-day investments: corporate governance in Asia.Recent events in various Asian markets have brought to focus the differing levels of governance and the implications for investor returns. Last month we saw a de-facto board-level coup in one of the most respected Indian companies - a flagbearer of corporate governance with one of the highest ranks in the region: Infosys. Then we heard that the Vice-Chairman and heir apparent to one of the largest and most successful companies in Asia, Samsung Electronics, was indicted and sentenced to five years in prison. In Hong Kong the news headlines were about how the Chinese communist party had successfully enshrined itself in the articles of association of more than thirty Chinese State-Owned Enterprises listed on the Hong Kong stock exchange.Investors have, many a time, asked us how we deal with corporate governance issues. Our usual response is that Asia has a diverse set of companies with varying issues so there is no one-size-fits-all answer. The investment team at <a href="http://www.rivervalleyasset.com/the-team" target="_blank">RVAM</a>, with over seventy years of combined experience, has experienced multiple market cycles and observed corporate governance in Asia evolving over time to fit the changing ecosystem. Ultimately, as investors, we look at all issues through the classic lens of expected return versus the risk being taken to achieve that return. Corporate governance concerns either lower the potential of cashflow returning to investors and/ or often increase the risk attributable to achievement of that potential return, which in turn may make a great business look poor from an investment attractiveness perspective.

In a period where the financial press is inundated by coverage of rising global uncertainty, whether due to a recalcitrant northern regime playing with forbidden toys or the rapidly falling hopes of an investment-led US boom or the catch-22 bind European policy makers find themselves while setting monetary policy, we are focusing on a more mundane but pertinent issue for day-to-day investments: corporate governance in Asia.Recent events in various Asian markets have brought to focus the differing levels of governance and the implications for investor returns. Last month we saw a de-facto board-level coup in one of the most respected Indian companies - a flagbearer of corporate governance with one of the highest ranks in the region: Infosys. Then we heard that the Vice-Chairman and heir apparent to one of the largest and most successful companies in Asia, Samsung Electronics, was indicted and sentenced to five years in prison. In Hong Kong the news headlines were about how the Chinese communist party had successfully enshrined itself in the articles of association of more than thirty Chinese State-Owned Enterprises listed on the Hong Kong stock exchange.Investors have, many a time, asked us how we deal with corporate governance issues. Our usual response is that Asia has a diverse set of companies with varying issues so there is no one-size-fits-all answer. The investment team at RVAM, with over seventy years of combined experience, has experienced multiple market cycles and observed corporate governance in Asia evolving over time to fit the changing ecosystem. Ultimately, as investors, we look at all issues through the classic lens of expected return versus the risk being taken to achieve that return. Corporate governance concerns either lower the potential of cashflow returning to investors and/ or often increase the risk attributable to achievement of that potential return, which in turn may make a great business look poor from an investment attractiveness perspective.

Corporate Governance and Asian Challenges

United States

MSCI Emerging Markets ESG Leaders Index (M1EFESR INDEX)

MSCI Emerging Markets ESG Leaders Index (M1EFESR INDEX)

The Evolving Paradigm of ESG

The investment industry is used to trends coming and going; the fundamental precepts that we follow, however, have remained the same, i.e. buying a...

River Valley Asset Management

Corporate Governance and Asian Challenges

In a period where the financial press is inundated by coverage of rising global uncertainty, whether due to a recalcitrant northern regime playing...

River Valley Asset Management