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You're listening to Strictly Business
Podcast with Lindsay Williams.

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Welcome, and today we are in conversation
with Clyde Rousseau, Portfolio Manager for

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the 91 Global

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Franchise Fund.

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It's been nearly four months of 2025 now,
Clyde, and it's given us everything,

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volatile markets mainly to the downside,

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although showing some signs of stability.

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It's had relationships that have been
well-worn over the years, sort of breaking

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away, notably the US.

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treasuries and equity market performances.

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There's been geopolitics simmering in the
background,

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and there's a new one with a standoff
between China and the United States when

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it comes to tariffs.

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So you've had everything.

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How was the fund positioned during these
difficult times, and how's it been holding

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up?

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Let's just take a step back quickly,
Lindsay.

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Thank you.

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Remember 2008, 2003, and 2024 were very
strong markets for for global equities,

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particularly US equities,

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and particularly the MAG7 stocks.

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And they almost look bulletproof.

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Looks like nothing could change.

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And then when Trump took over, I mean,
there were three promises that were made.

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The first one was deregulation.

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The second one was the onshoring of US
business, which is kind of the flip side

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of the tariff equation, which we'll talk
about now.

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And the third one is the tax cuts.

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Now, obviously, with that sort of hand,
trying to balance that, it was never going

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to be a smooth ride.

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Initially, the markets loved Trump.

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And as you said, the first four months of
this year, we've seen a different uh,

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movie unfold.

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And, and clearly the tariff issue is a big
issue because, because it is definitely

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upended, uh, two,

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two things.

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The first one is the idea around whether
the U S bull market can continue because

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this is kind of self-harm in many
respects.

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It's not like someone's forced that upon
the U S U S kind of forced it upon

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himself.

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And the second one is, you know, what,
what uncertainty and what prognosis does

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that leave us with in terms of,

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in terms of economic growth and
particularly the idea of slow growth and

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high inflation, which is not

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not really a great cocktail for financial
markets in general.

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So from our perspective, we were worried
about the persistence of trending markets

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where everything was just too good to be
true.

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And what we've seen in the last couple of
months is that that little fairy tale has

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actually disappeared.

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So I think for us, we've been waiting for
it.

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It's just frustrating in a way that's
taken so long to actually happen.

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Yeah, well, the volatility and the shift
of drivers.

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of return has, I think, helped you, helped
your performance.

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And you've been able to stay in positive
territory, which is always a very good

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thing, of course.

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Let's have a sort of magnifying glass on
your portfolio now.

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What kinds of businesses are you leaning
towards?

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And are you leaning towards them because
of the near four months of 2025?

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Or were you already, had you already
bought into them?

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I think there are two big things which are
busy unraveling.

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The first one is the sort of peak hype
around AI.

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Now, I'm not saying that AI is going to go
away.

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I mean, it'll be with us, and it's going
to intensify, and there'll be a lot of

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real world applications, and we'll all
have to find different ways of doing

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things.

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But the hype around the investment part is
definitely gone, and we've seen that peak.

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And that is probably a good thing, because
it means that markets will be broader.

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And the second one is we're worried about
the economic slowdown.

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So to your point around what kind of
businesses you want to own, if you're

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going to go into a reversal of those two
big trends.

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then Mag7 and hyperscale are not you don't
want to be in a narrow set of stocks.

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And secondly, you don't want to be in
stocks that have earnings risk because

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tariffs clearly are

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going to massively impact on supply chain,
availability, pricing, margins,

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and ultimately the leakage to government.

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Because what do tariffs do?

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Tariffs essentially take profits from
companies and give them to governments.

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So that's generally not a good thing for
equity markets.

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So when you look at our...

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portfolio.

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I mean, we're obviously looking for things
like pricing power.

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And I know everyone says that, but really,
I mean, if you're Ferrari and you face the

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high tariffs, you can actually put prices
up.

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Or if you're ASML and you're selling
lithography machines,

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you can put prices up because your
customer needs your high-tech demand or

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needs your high-tech tools in order to

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continue to function.

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So those are the kind of businesses you
want to own.

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And as you lean into the rest of this
year, where we're all going to figure out

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how businesses are impacted.

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I mean, those things are very valuable.

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And maybe you're right.

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Maybe we are always positioned that way.

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But it's really, you know, if you've got a
good business that's growing well in good

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times, you'll do fine.

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But your good business will really stand
out when suddenly funding markets become

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less attractive, balance sheets matter,

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annuity revenues are important rather than
trying to sell products.

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All of those things become relevant during
times of distress.

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I saw this interview with a mega donor for
the Republican Party.

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He's the head of a giant global financial
institution.

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And he's still a Trump supporter, this
fellow.

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But he said, America is not just a great
economy.

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It's not just a great country.

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It's a brand.

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And Donald Trump is damaging the brand.

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And that brings me to US exceptionalism.

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because that was a well-worn phrase,
almost overused, and suddenly it's a

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throwaway phrase.

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In other words, people are literally
throwing it away.

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But can the US become exceptional again?

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Well, look, that's a good question.

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I mean, I think when you talk about US
exceptionalism,

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let's differentiate between stock market
outperformance and the biggest

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multi-trillion dollar

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companies that exist, of which there's a
big concentration in the US,

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versus the performance of the US economy
and the inequality that exists within that

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society.

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Now, there are three levels to this
exceptionalism part.

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I think the only one way I would say I do
think that the US has got a chance is

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depending on how it plays its cards.

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is you should still be able to secure good
businesses that are well run,

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that are guided and founded on principles
that actually support a profit motive.

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If that is still the case, and therefore
capitalism survives, then I think the US

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is the best version of that.

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The other parts are very debatable.

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It's very debatable whether or not
there'll be any success whatsoever around

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reshoring manufacturing jobs.

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a very stark example.

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I mean, are textile workers that are
assembling high-performance shoes in

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Vietnam really going to relocate to the
US?

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Is that really an industry that's going to
be cultivated?

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I don't know.

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I think you do, but you won't say because
you're too polite.

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But anyway, you mentioned earlier about
the risk to growth and inflation and maybe

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the impact

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on global equity markets.

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And that sort of leads into my next
question nicely.

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Have you made any meaningful changes.

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during this time?

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Have you trimmed positions?

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Have you added new ones?

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Are there new members to the fund's
family?

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And if you have done, why?

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So, look, I mean, if we look at our
performance, I mean, obviously, we've been

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watching very carefully the way in which
shares have traded.

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We are long-term investors, but the
message and signaling from the markets is

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very important.

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And obviously, as you go through these
periods where we're all waking up and

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trying to digest headlines, which are
often contradictory,

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and there's been no shortage of
contradictory headlines.

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in the last four months, often from the
same policymaker.

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So it is a difficult environment to try
and interpret.

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And the first important thing that you've
got to bear in mind is that if you have an

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irrational statement and you make a
rational conclusion

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based on irrational policy, that could be
seen as rational.

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But if it's unwound, then your behavior is
irrational.

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So that's the first thing we are guarding
against is doing those sort of stupid

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things when there's a lot of irrationality
or potentially

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contradictory.

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information out there.

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So we've come through this quite well.

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We've had portfolios that have
outperformed.

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We've obviously clawed back quite a lot of
the underperformance from 2024.

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We went ahead of the market to be positive
in terms of performance here today.

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So all those things are good things.

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So we don't believe we've got the wrong
portfolio for the current environment.

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The big question that we're obviously
debating now is having had a lot of

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defense, stocks that have held up quite
well,

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there's opportunity to move some of that
defense into

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something which is maybe slightly more
growthy or something that can capture more

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of economic upside

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if there is some degree of normality that
returns to the marketplace.

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And those are the decisions we are making
at the margin, but I would stress at the

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margin.

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So a few changes to the portfolio, but
more to try and move from the defense into

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things that are maybe slightly more

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balanced in terms of capturing upside from
current levels.

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My final question, I'm just looking at it
and I've looked at it over the last couple

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of days and thought, maybe I should
rephrase this.

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Is this question relevant?

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Because I really sort of know the answer
myself, but you can shoot me down, of

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course.

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It goes like this.

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Why do you think quality companies, those
durable companies,

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those resilient compounders are the right
place to be in this environment?

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Because to my mind, they're the right
place to be in any environment.

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But does this environment lean towards
them even more and makes them even more

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relevant, Clyde?

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You know, look, obviously, what stocks you
own and the actual individual

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idiosyncratic opportunity of

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the company is probably more important
than just purely chasing a thematic.

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Because if you invest purely on the back
of cold, hard income statement and balance

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sheet numbers,

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you're probably going to miss quite a lot
in your investment thesis.

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So for us, I mean, we're obviously looking
to try and understand why businesses have

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got the

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right to win and why they produce the
metrics.

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And that's far more important than sort
of… chasing metrics, if you like.

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And I think a lot of investors out there
that have chased metrics, they've chased

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indices, they've chased style,

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they've chased stuff because it's easy to
throw into an algorithm and produce a

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portfolio on that basis.

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I think it's very important that people do
the work, understand the drivers,

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understand the companies, understand the
management,

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understand the thinking.

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And that's harder work than just producing
the stuff.

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So answer our question.

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I think there is a version of quality
which will do better.

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And it's all about making sure you have
the correct stocks with the correct

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drivers.

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And we're trying to make investments
easier rather than harder.

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So if you pick the right tailwinds,
hopefully you can end up with better

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investment success.

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Clyde, thank you so much for your time,
your analysis.

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Clyde Rousseau is Portfolio Manager for
the 91 Global Franchise Fund.

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The views and opinions expressed in these
podcasts are those of Lindsay Williams and

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various contributors and do not reflect
the policy,

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position or opinion of any other agency,
organisation,

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employer or company associated with
StrictlyBusinessPodcast.com.

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Assumptions made on the analyses are not
reflective of the position of any other

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entity other than the speaker or the
author.

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And since we are critically thinking human
beings, these views are always subject to

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change, revision, and re-evaluation.

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and rethinking at any time.

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Please do not hold us to them in
perpetuity.