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04 A Discussion with Ashraf Haque of Sands Capital Management

Steve Graziano & Ben Alge
Distinctively Active Podcast
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Distinctively Active Podcast Episode 4

Ashraf Haque:
So in the early days, we did a lot of the consumer convergence plays. And we still like some of those, but over the last few years, technology has really changed the opportunity set in a big way across every sector. In some ways, EM investing is moving more into our wheelhouse of the way we've thought about investing in growth companies at Sands.

Steve Graziano:
Welcome to Distinctively Active Investing, Profiles] and Perspectives presented by Touchstone Investments. I'm Steve Graziano, president of Touchstone. And on this show, you'll find out what makes Touchstone, its leaders, and its portfolio managers distinctive. We'll share in depth interviews with the people who are actively engaged in leading and managing the Touchstone Funds.

Ben Alge:
Hi, I'm Ben Alge, divisional vice president here at Touchstone Investments. Our guest today is Ashraf Haque, co-portfolio manager for the Touchstone Sands Capital Emerging Markets Growth Fund. Sands Capital Management is the fund's sub-advisor. Today, we'll learn about Sands Capital's investment philosophy, and we will delve into Ashraf's personal journey as well. Thanks for being with us. Ashraf, let's start at the beginning. How did you get involved in the investment business?

Ashraf Haque:
So I've wanted to do investing since I was in college. And when I was in college, there was a Yahoo fantasy stock market game, kind of like fantasy football for stock geeks. And I started playing that, and this was during the first dot com boom, and then burst. And since I was a college student, just between classes, I actually kind of figured out how to game the system and how to buy IPOs and flip them. And for a while, I was on the national leaderboard amongst several hundred thousand people.

So I thought that was pretty cool, but I didn't really understand how the markets worked. And at that time, I couldn't really find an investment gig. So I spent the next three or four years building what I thought was a toolkit to become an investor. I took a quarter off of school and spent half a year at investment banking, learning how to do models and read balance sheets and income statements, and things like that.

And then ultimately, when I graduated, I joined a startup that was focused on management assessment and evaluation. Spent two years there, and then I went to McKinsey for two years to do strategy consulting, just to figure out how businesses worked, what made a great business, what differentiated a great business from a bad business. So with those three experiences of a startup of a small business, a large Wall Street investment bank, and two years of strategy consulting, I went to business school explicitly to move into investing. And I did some internships along the way. But that was really the start of the investment business for me.

Ben Alge:
So there you are at grad school, and really have a passion for the investment business. How'd you come to find yourself at Sands Capital?

Ashraf Haque:
Sure. So in the mid 2000s, hedge funds were all the rage. And I was just like every other investor, I interned at a large hedge fund in Chicago, where I'm from. Ultimately ended up taking a job at a hedge fund in the mid Atlantic that was a Merger Arb hedge fund. And I didn't really enjoy what I was doing there once I got there. And it turns out that I didn't do a good job of aligning what I wanted to do, with my philosophy. So within a year, I was looking for something that was more in line with my temperament and my philosophy.

And in '08, spring/summer of '08, I interviewed with Frank six or seven times, Frank Sands. And I really liked the philosophy of concentration in the long-term horizon. Those are things that I saw in my own investment style that I'd done in my BA. And growth versus value. I didn't really have a strong view at that time, but I've grown to love growth investing since then. And I really liked the idea of a boutique firm where I could go in, understand what they were doing, and where I could have a lot of impact. So that's how I ended up at Sands in the fall of '08.

Ben Alge:
You talked a little bit about the growth and value dichotomy. What is it about growth stock investing that you find so appealing or interesting?

Ashraf Haque:
Well, growth investing is a forward-looking exercise. The best analogy I give to folks is, if you're looking at a house that costs a hundred bucks, value investing is saying, "Look, that house is really worth 200 bucks when the neighborhood improves and when I can make some fixes to it." Growth investing is saying, "Look, the house is selling for 200 bucks, but because of all these things I see in the environment, I actually think it's going to be worth $1,000 five years from now."

So they're both the same at the core, trying to buy things that are cheaper today and will be worth a lot more in the future. But growth investing, in my mind, is a little bit more of a creative exercise, a little bit more of a forward-looking exercise. And it's I think a lot harder to do. And most of the things that I grew up reading about investing tend to be about value investors. We all grew up reading Buffet and Graham and Dodd, and value investing is all you ever hear about. And a lot of those same principles apply to what we do, but this is much more, what's going to happen with businesses three or five years from now? How is the world changing to the future, and how can I understand that and take advantage of that?

Ben Alge:
So you start out at Sands Capital as a research analyst in 2008, and you eventually work your way up to portfolio manager of the Emerging Markets Equity Strategy. What was it about the emerging markets that you found so attractive?

Ashraf Haque:
Sands had just a U.S. growth strategy in 2008 when I joined. And then we just launched a global strategy in '08. And EM was an exciting, untouched area to go looking for ideas, and to learn about the world. But it's also where you had really dig in to understand the future of Starbucks, which I took over coverage of in '08, and Nike, which I recommended into our portfolios in 2009. So a lot of my early travels to these countries was just to do a good job being a U.S. analyst and a global consumer analyst. So I was putting consumer ideas into our global fund, which has had a 20 to 25% emerging market allocation since inception. And consumer lends itself really well to emerging markets. So I was one of the early guys at Sands to focus on it.

I led some of our first investments in India and China, and first trips to Russia to look at businesses. And as we saw more and more businesses, I bounced the idea of launching an EM fund to Frank Sands, and we found two other like-minded analysts in Neil Kansari and Brian Christiansen, who to this day are my co-PMs. And the three of us got to working on it together in 2011 and 2012. Now, mind you, we were still analysts putting ideas into global and U.S., so this was a lot of nights and weekends where we would do research on companies.

We had an ongoing Saturday morning conference call for a full year where we vetted ideas. And then we launched the strategy together in 2013. So today, we have a seven year and a quarter track record. And the big insight we had back then was, the old way of doing EM investing, which is macro, top down, let me pick the best countries, and then let me buy the biggest stocks in those countries, that way of EM investing was probably not going to work, and our approach of identifying fantastic growth franchises might be a better way.

So in the early days, we did a lot of the consumer convergence plays. And we still like some of those, but over the last few years, technology has really changed the opportunity set in a big way across every sector. In some ways, EM investing is moving more into our wheelhouse of the way we've thought about investing in growth companies at Sands.

Ben Alge:
Let's talk about EM innovation. What kinds of innovation are you seeing in the emerging markets?

Ashraf Haque:
Yeah, so every EM investor knows the middle class rising story, and we certainly appreciate that as people move to cities, they get wealthier, and people move up to some very predictable consumption curve. So that backdrop is still there, and we're still looking at those businesses. But the biggest change that's happened is that every company has become a tech company. And we see that in the United States, we see that in Europe, and we certainly see that in EM.

So there's obvious stuff happening in e-commerce, in gaming, and search, and we have plenty of exposure to that. But even areas like food delivery and travel and payments are all being impacted by innovation and technology driven innovation. So just to give you a couple examples, we own a business in India called Bajaj Finance, which is a lending business for consumer durables. So if someone wants to buy a smartphone or an air conditioner or a refrigerator, and they want to make installment payments over 10 months, Bajaj will offer you 0% interest on that.

So that's not that innovative, but the way they make the loan is really innovative. You go to their lending desk, which is in the back of the store, and the consumer scans their thumbprint. And within minutes, that thumbprint is connected to what's called the IndiaStack, which is a technology infrastructure that the Indian government has built that has credit records and all your billing history, a lot of information about your job and things like that. And Bajaj can access certain parts of it that you authorize, and can make a decision on whether to make you a loan or not within a couple of minutes. That type of innovation allows them to make loans faster and approve and lend to much better credits than they could in the past using traditional methods.

Another thing we're seeing is how there's a leapfrogging happening in payments. So in China, the consumer skipped from cash ... They skipped credit cards altogether. They went from cash to QR code payments, using tools like Alipay. And once a consumer has an Alipay account, not only can they pay bills or buy vegetables, or whatever, or transfer money, but they can also invest in money market funds, and mutual funds, and buy insurance, and take care of all sorts of other financial needs that they might have.

And so the key theme between both of those is this idea of leapfrogging, where in the U.S., my credit card works just fine. So for me to adopt a QR code payment is more of a pain than anything. But in China and India, the legacy infrastructure isn't there, so it allows room for some of these innovative leapfrog technologies, both business technologies, like the Bajaj Finance example I gave, or consumer facing technologies, like Alipay, to really flourish.

Ben Alge:
So Ashraf, it would appear that you spent a lot of time in China over the past decade, given some of the businesses you own there today. Can you talk a bit about China and how it has evolved over the last decade to become such an economic powerhouse?

Ashraf Haque:
China has been emerging as a powerhouse for over 40 years now. And in that process, they've lifted 500 million people out of poverty. But the real shift you've seen over the last decade is that China's domestic market is becoming large enough to really matter. It used to be that China's economy was driven by exports to the U.S., to Europe, and driven by fixed asset investments that the government was making to build roads and bridges and airports. Now, there are something like 400 million millennials in China, and they matter a lot more to the Chinese economy than exporting to American consumers. And that's led to a certain confidence for Chinese leaders and consumers and businesses. And we're starting to see an era where the world has taken notice, and it's likely going to become a lot more combative towards China. And I think that's just going to further emphasize the importance of the domestic economy, and China's regional ambitions and sphere of influence.

So that's really what's happened over the last decade that's new. For us as global EM investors, we're seeing great businesses going after this opportunity in e-commerce, in gaming, in athletic footwear, afterschool tutoring, biotech. And the biggest of that is Alibaba, which we've owned since the IPO. And it kind of highlights the Sands process.

We got to know that business for well over a year before they went public, through lots of meetings with the company, through talking to different parts of the ecosystem, talking to consumers, doing surveys. Our analyst actually went and lived in China for six months because we saw a wave of these Chinese e-commerce companies coming, so he really wanted to get immersed in that. And that gave us the confidence to take down what was probably the largest allocation to any U.S. fund across not just EM, but across our U.S., global, and emerging market funds when the IPO happened five years ago.

Ben Alge:
Can you share more about where you believe there are pockets of innovation in the emerging markets?

Ashraf Haque:
Another big area of focus for us is Southeast Asia, or ASEAN. These are the countries of Indonesia, Thailand, Malaysia, Vietnam. Together, these six or seven countries account for almost 600 million people. We have a 15% weight in that region, so it's almost getting to the size of our Indian allocation. And some of these economies are quite advanced, like Thailand, And some of them are just emerging, like Vietnam. We found interesting businesses, maybe one or two in each of these economies so far.

Our largest allocation is a business called Sea Limited, which is a gaming company that's based in Singapore, but its biggest markets are these Southeast Asian countries that I just talked about. So when FIFA wants to launch into Southeast Asia, or when Tencent wants to launch its games into this region, they have to partner with Sea Limited to distribute those games, and Tencent actually owns about a third of Sea. Their other business, which is really undervalued by the market, is their e-commerce business.

They're now the leading e-commerce company across all of these countries. And they actually have overtaken a company that Alibaba owns, called Lazada, to become the leader. And they did that by focusing on categories that were stickier, like fashion, like cosmetics, like home goods, and providing both sellers and buyers a better mobile first buying experience and selling experience. Again, this is another company that we took our global expertise in e-commerce and experience in e-commerce, and got an allocation in the IPO, and we've owned it since, and it's become a big weight across several Sands strategies recently.

Ben Alge:
So looking at frontier markets, can you spend some time on frontier market equities and any potential opportunities you believe may be in frontier markets?

Ashraf Haque:
We've always maintained exposure to frontier markets. It's usually been between five to 10% of the portfolio. And our mandate is broad. It's anything that's outside of developed markets. In the past, we've owned businesses in Saudi and Jordan. Today, we own a Cambodian casino. We own a shopping mall in Vietnam, and we own a couple businesses in Argentina, which has now, again, been classified as a frontier market by MSCI. The interesting one to highlight might be Vietnam. It's an economy that is benefiting from global supply chains shifting away from China. 

Ben Alge:
So you look at these emerging markets and frontier market equities. What does the final portfolio look like once it's constructed?

Ashraf Haque:
Once we do a lot of the work picking the businesses, there's a process of going from a pile of businesses to a portfolio that represents our best views. Part of that is sorting out the portfolio into what are our highest conviction ideas. And those tend to be ones with really large addressable markets, very strong leadership positions, great management teams, compelling valuation. And those tend to be what we call our large weights, our large bucket weights. And those are 3% and higher. Today, the top 10 in the portfolio is about 55% of the portfolio. So getting those top 10 right is a big part of my job as a PM.

The next - call it 40% of the portfolio is clustered in the next 20 businesses. And these are great franchises that we think we can own for five years or longer, but maybe they, for whatever reason, they're a more fragmented market or their macro is not quite as compelling. The valuation may be a little elevated. We keep those in the middle of the portfolio. And we're always asking which of those are going to be the next set of top 10 businesses.

And then at the bottom of the portfolio, we have a few businesses that are either on the way in or on the way out, or are just not liquid enough to own at a big weight as the strategy continues to scale up. Within that exercise of portfolio construction, we have to keep in mind that we have a very low turnover approach. We may be buying five or six businesses a year. Our turnover has averaged about 20% since this strategy started, and that's the same for all Sands strategies. And the reason for that is, we buy businesses to own them for at least five years. And if we get it right, we want to own it for much longer. And our basic view is that exceptional businesses don't get created that often, and they don't come in and out of the portfolio that often.

Ben Alge:
What sets Sands Capital apart from your emerging market equity competitors? What do you consider that investment edge?

Ashraf Haque:
I think there's three sources of edge that we have, and they all align with our philosophy, so they're core to every strategy at Sands. The first is, we look for exceptional growth businesses. And the reason why I believe that's a source of edge is that most people think that businesses ... And most businesses do revert to the mean. There's very few businesses out there that can grow for much longer than people expect, or can be much bigger in a nonlinear growth fashion than most people expect. And our entire investment process is geared towards identifying those. If that's not your focus, you're going to miss those. And so I would say looking for exceptional growth businesses is our first source of edge.

The second source of edge is conviction weighted portfolios are our best ideas. So you may find great businesses, but then, you diversify that edge away by owning lots of crappy or mediocre businesses. We don't do that. We say, "We're going to own a lot of big weights in these great businesses." In our U.S. strategy, it's 25 to 30 businesses. In our global and EM strategies, it's anywhere between 35 and 40 businesses. Today it's 37 in the emerging markets growth portfolio. And as I mentioned earlier, we own them in big weights. Our biggest weights can be 10, 11% weights. And our top 10 is 55% of the portfolio today.

And the third part, the third source of edge, is our long-term horizon. A lot of people identify great businesses, but then at the first sign of volatility, they'll run for the hills. When we do the deep work that I talked about earlier to gain conviction, that enables us to stay invested during periods of volatility. When others are running for the hills and we have a great business, we're often buying more of that business. And so that long-term horizon is a really important part of delivering alpha1, along with the other two points I just mentioned.

Ben Alge:
Looking at your investment team, they're all based in Arlington, Virginia, and a lot of emerging markets equity research teams have people all over the world. How does Sands Capital think about one location versus different people in different countries?

Ashraf Haque:
We made a very deliberate call to all be based in DC. And we travel a ton all over the world, but we thought it was important to stay here. And the reason why is, we prioritize business model expertise over having a local presence on the ground in Brazil. And we've seen this play out over and over again. For the investor who's based in Brazil, who's covering Mercado Libre, they're probably a generalist or a consumer analyst. They've never seen anything like that. We have lived and succeeded and sometimes failed investing in companies like that over years and years and years in many different geographies.

So business model expertise really matters a lot, and we supplement that with a lot of on the ground time, traveling, and meeting with management teams, talking to consumers, talking to suppliers. And the other aspect of this is, we've over time built a team of folks who are very comfortable in these markets. Some of them are natives who grew up in those countries, who have immigrated to the United States. Some of them speak the language, so we have those capabilities as well. So we believe for our investment style, which is looking for great franchises to own for long periods of time, this works for us. If we were a short term, a kind of high turnover manager where we needed to be plugged into the news flow or the latest kind of market whispers, it might not work as well as it does. But it's the right approach, we believe, for our style of investing.

Ben Alge:
So emerging markets equity investing is sometimes considered, quote unquote, risky, and growth equity investing can be considered risky as well. So Sands Capital's putting those two things together. How do you think about that in a risk framework?

Ashraf Haque:
I think our approach to this is, if you buy great businesses, and you do the work upfront to identify what makes them great, you build conviction in them, you can own them for a long period of time. What we've seen is, when markets are selling off, and emerging markets certainly has been a very tough place to be for the last 10 years, and it probably will remain a tough place to be. It pays to be very selective, and it pays to know the businesses really well. What we've seen in market sell-offs is that our businesses, which tend to be these higher quality businesses, tend to hang in there much better. So our performance on the downside is quite strong.

There are times when this style won't work, and we have experienced a couple of those, but our bet is that those will be short-lived versus, this focus on domestic demand, which I've been talking about as the real wealth creator, we believe that's going to be the real long-term story in EM. So the short term blips that happened, for example, in 2016, when there's a big commodity rally or a big value rally, we don't chase that stuff. We don't know how to do that stuff. We may be underperforming during those periods, but the bet we've made is that there's not going to be any buyers of commodity on the scale of China to really make commodities an investable part of EM anymore in a structural way. So that's why we think the EM story has really shifted to this more domestic demand story. Our approach of identifying the best of those, I think, is what allows us to outperform.

Ben Alge:
So all investment styles have headwinds and tailwinds, when would your growth equity style typically be in favor in emerging markets, and when are you more likely to have style headwinds?

Ashraf Haque:
I think the strategy works when the macro is neutral, or even when the macro is a little nervous. When the U.S. dollar is the safe haven for investors, emerging markets tends to get sold off. And we have a long-only, fully invested portfolio, so we're going to sell off as well. Although we tend to hang in there better in these selloffs because of the quality of our businesses. When investors are fleeing EM, some are just hitting the exit button altogether, but some are saying, "Look, I want to get out of the crappy state-owned enterprises in Brazil and Russia. I want to get out of the Chinese banks because that's where my risk is higher. And I want to go into Tencent and Alibaba, and these types of the great Indian franchises that we own."

So we've found that on the downside, we tend to do quite well. And then when there's not a big macro story, when it's just stock picking matters, we tend to do quite well. An environment where we won't do so well is if you see the oil price go from 20 bucks, or whatever it is today, 15 bucks, to 70 in a very short period of time, because that will lead to some of these energy companies quadrupling within a very short amount of time. And even though they're a much smaller part of the benchmark than they were in '13, '14, '15, given that we have zero exposure to those, we may underperform there.

Ben Alge:
Let's talk about ESG for a minute. How does Sands Capital incorporate ESG into its investment process?

Ashraf Haque:
ESG has been a really hot topic with investors. And we had the fortune of working with Australian and European clients who were five years ahead of most American investors in this respect. So we had to kind of build this muscle up back then. And some parts of ESG, like governance, have always been part of our process, making sure that we don't own these state-owned enterprises, that we invest in professionally managed or entrepreneurially-driven companies, in that the boards are stacked in the favor of minority shareholders, as opposed to just to steal money from the company, which is something you see a lot in emerging markets.

So the G part of ESG has been a big part of what we've done. Now we've become more explicit about the E and the S part. On the environmental part, it's not really an issue for us given that we don't do much energy or commodities. Of course, there are some second order issues. Our apparel companies are talking about things like water waste, and we're helping them with those discussions. Social is really about treatment of your workforce and paying wages and things like that. Our general approach with ESG is that we're trying to be active owners of our businesses.

What that means is. we have an important seat at the table. We tend to be large shareholders and we tend to be long-term shareholders. So our companies often are looking to us to say, "Hey, you guys are in the U.S. You do global investing. What are you seeing that I can incorporate into my process in India or China or Brazil?" And we're happy to consult or give advice to our companies where it makes sense. What we're not doing is, we're not activists. We're not buying bad companies to turn them around with better governance tools. But I think this active owner approach is a fine one, and it gives us a really important voice at the table.

Ben Alge:
Looking back over the last decade or so, what are some of the biggest changes in the investment business that you've seen in your career?

Ashraf Haque:
I think the couple of trends that I've picked up on are the big are getting bigger, and scale is winning out. That's certainly happening as larger asset managers tend to buy others and get even bigger. The sell side is getting decimated as a business. So the value of stock pickers who can find the next great business is increasing. I think the list of companies that are covered by sell side, it's narrowing in the United States, and once you get out of the United States, it gets very thin, very fast. So I think active ownership and active stock picking can really pay off there.

So for a boutique like ours to thrive, we need a clear philosophy, great people to execute on it, of course investment results to back it all up. Today, we're about $5 billion in emerging markets growth. As we get to seven, eight, nine, 10 billion, we'll start thinking about soft closing it. But one thing I will say about capacity is that in EM, it's very dynamic. We've seen many more companies come to the public market. So we don't want to get to become a behemoth that has to buy Vale and Petrobras. But at the same time, we think this strategy has plenty of room to scale.

Ben Alge:
So Ashraf, let's talk about the future. Over the next 10 years, what do you believe the biggest trends will be that are going to drive market performance?

Ashraf Haque:
So we're not big macro thinkers. For us, the answer will always be the same like it's been for 25 years. It starts with finding great businesses. But of course, we read about the markets and we're active participants. I think one big thing we're trying to get our heads around is the role of central banks and the fiscal and monetary policy that's merging. It's something that we've seen in emerging markets for a long time, but we may start seeing that in the developed world. In many ways, central banks are becoming very important players in developed markets, like they have always been in emerging markets.

So that's an interesting, kind of new thing that we're trying to get our heads around. And I guess another thing we're working through is, if the story of the last 10 years has been the rise of passive, it's going to be really interesting to see how that changes when there's a big market correction, because passive tends to amplify whatever direction that you're going in. So in up markets, the passive trend continues to get bigger, but in down markets, you may see a rush to the exits as some of these big strategies start to underperform. So it will be very interesting to see if active management gets back in favor over the next 10 years.

Ben Alge:
What advice would you give to someone getting into the investment business today?

Ashraf Haque:
It's a great business, but it's a really hard business as well. There's a lot of luck involved in addition to some skill. I would say for someone who's outside and trying to get in, demonstrate your genuine interest. If you're in college clubs, investment clubs, get involved with them. If you're out of college, take the CFA. That's a great way to show that you're dedicated. That's a hard road to take. Read the right books, write up investment cases.

There's a lot of forums out there now that weren't around when I was trying to play the Yahoo stock market game, Seeking Alpha or SumZero, where you can kind of publish your investment write-ups and get feedback on them. So when I look at a candidate, everyone who I talk to wants to be in the investment business. But what separates the folks who we go deeper with are those who can demonstrate their genuine interest in investing.

Ben Alge:
You talked about active management. Why does active management matter going forward?

Ashraf Haque:
Well, especially in emerging markets, I think emerging markets, as I mentioned, has been tough for a while, and it's going to be tough. Emerging markets is evolving as an asset class. I think emerging markets over the next five, 10 years is going to be a lot about China, and maybe India, and then everybody else. The whole BRIC story that was a big part of EM 10 years ago has fallen off. Brazil is a basket case. Russia is a basket case, and I don't think they're going to be big parts of anyone's portfolio.

All that leads me to the view that being very selective matters. And being able to pick your spots, being able to avoid most of it, that matters. And to me, that's an active management setup. It's hard to do that passively. Even if you buy country ETFs, within a country, there's a huge variety of businesses. Within the U.S., you can buy a sector ETF, or you can buy ETFs that are a little bit more targeted and more nuanced, but in EM, there is no other way to go besides being active.

Ben Alge:
So Ashraf, what keeps you up at night work-wise?

Ashraf Haque:
Not a lot work-wise, but I think a little bit about the U.S., China relationship. And I think about my position and our firm's position as global and EM investors sitting out of Washington, DC. And if the U.S., China relationship becomes really toxic, there are some scenarios where U.S. investors may have to reconsider. I mean, there were talks from the Trump administration a few ... Last year, it's coming to the surface again of potentially banning Chinese ADRs from U.S. markets.

I think that could really damage the credibility of U.S. capital markets. Of course, we would have to respond to that, and we would probably figure out a way around it. Something like Alibaba, our biggest position, is also listed in Hong Kong. So that's an easy one, but in general, it's things like that, that probably keep me up a little bit more. Again, being very long-term, monthly performance or daily performance don't really bother me that much. We're in this for the long game, and I think we have a great philosophy, team, and process to execute on.

Ben Alge:
What are your hobbies outside of work?

Ashraf Haque:
Yeah, for the last few years, I play basketball. I've been playing my entire life. And now that I'm over 40, I play in a 40 and over league Sunday nights. And that's my favorite thing to do. I really don't like working out, but that's the most activity I get, which I really enjoy. I read a ton. I read a lot of fiction because most of my day is spent reading research reports and notes for my team. So I tend to read a lot of fiction, a lot of historical fiction. During the COVID lockdown, I've picked up some new hobbies with my kids, doing lots of puzzles and games. We are doing movie marathons and doing Settlers of Catan, and a new puzzle every week. So those are some of the things I'm spending my time on outside of work right now.

Ben Alge:
If you weren't in the investment business, what do you think you'd be doing?

Ashraf Haque:
I think I might be a teacher. My father is a teacher. I come from a long family of teachers. My father, all three of my sisters have done stints teaching. I really like taking complex concepts and kind of breaking them down into simpler bits. I've never pursued it in a meaningful way, but I think that could be pretty rewarding.

Ben Alge:
So Ashraf, what book are you reading right now?

Ashraf Haque:
So I read a lot. I read a lot of historical fiction. I read a lot of science fiction. Currently, I'm reading a book called The Three-body problem. It's a Chinese science fiction series that's been translated to English. I don't read Chinese, but it's fantastic. I'm really enjoying it. It's a futurist book about the human race contacting an alien civilization that's coming to Earth 400 years in the future, and how will earth prepare to defend itself from this invasion. The last investing book I've read was called A Man for All Markets by Ed Thorp. He's the father of quant investing. It's totally different type of investing than what we do at Sands, but I like investing very broadly, and I really like reading about some of the pioneers. And that's a fantastic book from who many consider the father of quant investing.

Ben Alge:
Lots of leaders have daily routines to keep them at their best and stay focused. Do you have anything like that in your daily routine?

Ashraf Haque:
I'm always jealous of the business leader who runs eight miles at 6:00 AM. That's just not who I am. Honestly, my kids, who are 12, eight and seven, are kind of the most important thing in my life, and they determine a lot of my routines. My faith also determines a lot of what I do in my routines, including pausing in the middle of the day to pray and be grateful for everything I have. Those are probably the things that I think determine my routine and have for the last decade, and probably will for the next decade. Maybe when I'm a little older, I can get on the running at 6:00 AM train.

Ben Alge:
What is the most interesting place in the world you've ever visited?

Ashraf Haque:
One of the privileges or benefits of my job is that we get to travel a ton, and I enjoy traveling. Probably the most interesting place I've been to was my first trip to China, which happened well over a decade ago. And not Beijing or Shanghai, but going to what was considered a tier five city in China called Fuling. I'd read about this place in a book called River Town by Peter Hessler, which was one of the first China focused books I read. And this is a town that's down river from the Three Gorges Dam, which is one of the largest dam projects in the world.

And the book was about how the town was going to deal with being flooded over. So I actually went and visited this town with a couple of my colleagues, and the amazing things about it to me were, a tier five city in China, even 10 years ago, the level of development I saw there, the roads, the buildings, the markets, were so far above and beyond anything I've seen in India or any other emerging markets.

To me, it was a huge eye opener of the power of China. It's been a theme that we've touched on a lot in the conversation today, but that was 10 years ago in a tier five city. Imagine what a tier one city in China is doing now in terms of its progress and the distance it's put between itself and a lot of the rest of the world. So that's probably one of my favorite memories from traveling.

Ben Alge:
Thanks to Ashraf for sharing his insights today into Sands Capital's investment process, as well as his personal interest and background. Until next time, I'm Ben Alge.

Steve Graziano:
Thank you for listening to Distinctively Active Investing. You can find the resources mentioned in the episode and learn all about Touchstone active managers at www.TouchstoneInvestments.com. If you liked the show, please share it with someone you know. We appreciate when you subscribe to the show and take the time to leave us a rating and review. Find our podcast on Apple Podcasts, Spotify, or your favorite podcast app. I'm Steve Graziano. From all of us at Touchstone Investments, thank you for listening.


As of June 30, 2020, Sea Ltd., made up 9.44%, Tencent Holdings Ltd. made up 9.85%, Bajaj Finance Limited made up 2.69%, Alibaba Group Holding Ltd. made up 9.32%, MercadoLibre made up 6.74% and Yahoo! Inc., Starbucks Corporation, Nike, Inc., Alipay, Lazada Group, Vale S.A. and Petróleo Brasileiro S.A made up 0.00% of the Touchstone Sands Capital Emerging Markets Growth Fund. Current and future portfolio holdings are subject to change.

1Alpha is the portion of a fund’s total return that is unique to that fund and is independent of movements in the benchmark.

Investment return and principal value of an investment in a Fund will fluctuate so that investor's shares, when redeemed, may be worth more or less than their original cost. All investing involves risk.

Performance data quoted is past performance which is no guarantee of future results.


The information provided is for general information purposes and is not investment advice. Opinions may change without notice based on economic, market, business, and other conditions. Please consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. The prospectus and the summary prospectus contain this and other information about the Fund. To obtain a prospectus or a summary prospectus, contact your financial professional or download and/or request one at TouchstoneInvestments.com/resources or call Touchstone at 800.638.8194. Please read the prospectus and/or summary prospectus carefully before investing.

Touchstone funds are distributed by Touchstone Securities, Inc. a member FINRA and SIPC.

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