Toronto perch, world views

Now, one year later, it has become apparent that Perez-Coutts’ expertise remains available to most investors and that she is continuing to do what she enjoys most: making emerging markets an attractive proposition for investors. Perez-Coutts’ team has attracted a sizable, $1.5-billion chunk of assets under management (AUM), including three mutual funds sponsored by Montreal-based National Bank of Canada that are available through the independent advisory network. Through these funds, National Bank Securities Inc. sponsored funds account for about one-third of Westwood International’s AUM.

“National Bank has become our partner in Canada,” says Perez-Coutts. “There was trust, candour and openness from the beginning. It’s a collegial and communicative relationship – and fruitful in many ways.”

There was no shortage of offers to manage money after Perez-Coutts’ move: “The phones were ringing off the hook.” By August 2012, she and her team had taken over the management of an existing National Bank-sponsored fund, Omega Emerging Markets Fund, now renamed Westwood Emerging Markets Fund. By October, National Bank had launched Westwood Global Equity and Westwood Global Dividend funds, also managed by Perez-Coutts’ team. The 12-person team includes seven portfolio managers, of which five, including Perez-Coutts, worked closely together for many years at AGF.

AGF Emerging Markets Fund was named the top fund in the emerging-markets category at the Canadian Investment Fund Awards, sponsored by Morningstar Canada, for six consecutive years while under Perez-Coutts’ leadership. “It’s nice to win the awards, but the excitement lasts for about two minutes,” she says. “In my waking moments, I’m focused on managing the fund for long-term outperformance. I’m like a horse with blinders on, and I’m always chasing the carrot.”

Likewise, Perez-Coutts spends little time fretting about the lawsuit launched by AGF when she and her team members accepted new jobs at Westwood International. AGF’s suit claims the departing portfolio managers breached their employment contracts; AGF is seeking $10 million in damages. Perez-Coutts responded in a statement at the time that the team members, who are fighting the allegations, had honoured their obligations and “look forward to clearing our reputations.”

Perez-Coutts is reluctant to say more about the outstanding lawsuit, except that it has not dented her team’s enthusiasm and that, at 48 years old, she “has never looked back. For now, it’s a little stone in my shoe.”

Perez-Coutts, as an only child growing up in Lima, Peru, possessed determination, focus and ambition. By the age of 10, she was an avid reader of books and newspapers and was interested in the life stories of world leaders such as Golda Meir and Indira Gandhi. Perez-Coutts’ mother encouraged the young Patricia to expand her horizons: “We lived through a military dictatorship, then democracy and then terrorism. But my mother always encouraged me to complete a university education and to leave Peru and see the world.”

Perez-Coutts graduated with honours in her pursuit of her bachelor of arts (BA) degree in economics from Pontificia Universidad Católica del Peru in 1986, and her first job was as an economic advisor with Peru’s Institute of Foreign Trade. She emigrated to Canada a year later and obtained a BA in mathematics for commerce from Toronto’s York University. Then, she worked for First Mercantile Corp. in Toronto for four years, becoming a vice president, before moving to Trimark Financial Corp. of Toronto, for which she specialized in Latin American investments and became co-manager of Trimark Americas Fund.

Perez-Coutts received her chartered financial analyst designation in 2001. That same year, she moved to AGF, where she stayed until May 2012. As senior vice president and portfolio manager, she worked as co-leader of the global team and then as lead manager of the emerging-markets team, with responsibility for $6.5 billion in AUM at the time of her departure.

Perez-Coutts oversees the AUM in global and emerging markets for Westwood International’s base of clients, including accounts based in the U.S., Europe and Asia. About 70% of this AUM is in emerging-markets portfolios, with the remainder in broader global assets. Perez-Coutts is lead manager of the emerging-markets strategy and co-manager of the global equities strategy, which is led by Thomas Pinto-Basto, vice president. Although she is involved in some client meetings and marketing/communications activities, she spends more than 90% of her time on investment management, where her passion lies. Her goal is to deliver superior returns for three-, five- and 10-year periods. “I’m not an asset-gatherer,” she says. “I’m a full-time portfolio manager who does business with a view to outperforming in the long run.”

As the lead manager for emerging-markets portfolios, Perez-Coutts reviews her investments every day to reassess the case for each holding. Many of her portfolios’ holdings have been held in previous portfolios. Her longest holding is Bank Bradesco SA of Brazil, shares of which she originally bought in 1996 for Trimark Americas Fund. Says Perez-Coutts: “I know every holding like a person I’ve known for many years.”

Perez-Coutts selects stocks from a potential universe of 27 countries. She regularly screens 1,400 securities, narrowing them down to a “watch list” of 300 to 400 stocks, then selecting 80 to 100 that are worthy of detailed analysis. She typically holds 70 to 90 stocks in the emerging-markets portfolio, selecting companies with a strong business franchise, above-average cash flow, consistent earnings growth, ample liquidity and the ability or prospective ability to pay dividends. Currently, her largest geographical weightings are in China/Hong Kong, Brazil, South Africa, Mexico and India, but she also invests in smaller markets such as Israel, Egypt, Vietnam and Romania.

Perez-Coutts says economic and secular trends in individual countries are important, but detailed analysis of each company from the bottom up is crucial. Financial statistics are always compared to holdings competitors’ and to the holding’s history. Perez-Coutts always looks back at least two business cycles.

Perez-Coutts and her team members regularly visit personally with holding companies’ leaders in order to understand the firms better. Perez-Coutts takes about four such “long haul” trips a year: “We can pick up the phone and call these companies and they know us. We work hard to build the bridge and maintain it.”

Perez-Coutts and her husband, Barry Coutts, have two sons, aged 14 and 10, but Perez-Coutts describes emerging markets as her “third child and ‘sister’ to my sons.”

© 2013 Investment Executive. All rights reserved.