About

Our small group of experienced investors aims to deliver robust long term absolute returns. Our founder, Jonathan Knowles, has over three decades of investment experience, and successfully delivered strong absolute long term returns despite the 2008 great financial crisis and the COVID crisis. The small group is devoid of bureaucracy, ultra focused and economically aligned to identify the world’s best companies. The fund returns depend on us making good investment decisions, which we dwell on relentlessly.

The Compound Global Funds are concentrated, owning 20-25 businesses, from a pool of around 150 of the world’s best companies. We place great emphasis on certainty in our decision process. What do we really know? Our decisions will be driven by data and facts, not by hunch and momentum. We believe there are relatively few good-to-great businesses in the world and will work to identify these businesses and invest when the valuation is sensible. We try to keep things simple and believe identifying and deciding on 20-25 businesses we can own for the long run is already a significant challenge.

Patience is perhaps our biggest competitive advantage. We seek to safeguard family wealth and need to apply generational patience; waiting is central to our strategy. Good investments are like London buses, you can wait for an eternity then suddenly two or three come along. We strive to be patient, sit on our hands and wait for the opportunity. To quote Munger “The wise ones bet heavily when the world offers them that opportunity”. Once we own a business, we again need to be patient. Nirvana for us is investigating a small business that evolves into a large business over a period of years, veritable “acorns to oaks”.

Many of the businesses we invest in will have substantial competitive moats, a barrier that allows them to thrive and grow. The barrier might be a technology, a brand, a product, or a geography. We seek companies that are profitable and have the moat to continue to invest at high rates of return, in turn driving growth.

We consider paranoia an important adjunct to patience and need to constantly re-evaluate holdings. Are they evolving as we anticipated? Is the competitive moat eroding? Has management changed course? Is the incremental return on capital declining? Is the quality of earnings deteriorating? Do we really understand the business as we originally thought? Is the Darwinian process of capitalism undermining a business? We need to be brutally honest with ourselves.

While our approach is fundamentally long-term, we work as active managers and will endeavour to adjust as the facts change. This means relentless self-questioning and occasionally adjusting our holdings to reflect our level of certainty.

Good investors have some commonality with Premier League strikers. When the striker is scoring they are revered by the club fans. When the investor is putting up strong returns the fund holders are exuberant. However, for strikers and fund managers there are periods when the goals dry up or the returns stagnate and their respective audience becomes disenchanted. In the dry times both need to tolerate the unpopularity, accept the flak, and carefully analyse and reflect on what, if anything, they need to change.