Ivy: success explained

Reprinted with permission from the Mackenzie Ivy Quarterly Report, Q3 2015.

Ivy has had a long-term track record of success not only in terms of mutual fund returns but also with respect to client outcomes. We believe this success has been achieved primarily because of our belief system, which has been built upon by the many individuals who have been part of this team over the years. It’s a system of intellectual honesty (seek out truth, rather than prove your case), intellectual curiosity (always assume you’re missing something) and independent thought (be brave). We think more in terms of principles than rules (although we do have rules), it’s more qualitative than quantitative (although there is a lot of quantitative work that goes into our analysis) and strategy is more important than tactics (although we are at times tactical). It’s more about understanding your companies than knowing them. We let go rather than control and we listen more than we talk.

We always give people a straight bill of goods concerning what we know and don’t know, about what we can control and what we cannot. We don’t have anything to hide. We believe that such an approach usually leads to a higher level of trust. It’s important to us that clients know we’ve been straight with them and in that way they are able to then make the best assessment possible as to whether or not Ivy is right for them. Successfully managing client expectations usually results in good outcomes.

Ivy is about patience and discipline. Patience is required to do the work necessary to find a great business and then allow the superior competitive advantage and corporate culture of that business to play out over time. Discipline is necessary to make sure you’re not overpaying for that great business, and to make sure you sell it if it gets too expensive, or if your investment thesis changes (i.e., don’t fall in love with your stocks).

Of course we have made a number of mistakes along the way and there are some regrets. However, it’s all part of continuously moving forward and the constant evolution of improving our analysis, refining our investment process and positioning our team for long-term success.