Cheaper, faster growing and higher quality than anything else on the market. Those are the qualities Jordan Cvetanovski, a portfolio manager who has outperformed over the past nearly two decades, has looked for in stocks. The results have proven to be consistent throughout the global financial crisis, the era of zero interest rates, and now the era of high interest rates. “In my career, I’ve managed several different funds that tend to perform very similarly…the reason is that whenever we create a fund, we make sure that the fund is cheaper than the market and grows faster than the market It’s fast and the quality is higher than the market,” he told CNBC Pro last week. His Pella Global Generations Fund has returned nearly 20% since its inception in 2022 through May 31, outperforming its benchmark, MSCI ACWI, MSCI’s flagship global equity index, by 7%. From 2015 to 2021, when he managed the Pengana International Equity Fund at the Australian fund management company Pengana Capital Group, the fund’s annual return was 12.1%, which was 2.1% higher than the same benchmark. At French asset manager Carmignac, his Carmignac Grande Europe Fund returned nearly 16% between 2006 and 2010, beating its benchmark Euro Stoxx index, which returned 27.3% over the same period. He managed his family’s estate from 2011 to 2014. “Obsessive” and “disciplined” Cvetanovski said he was “very obsessive and…disciplined” when looking at valuations, something he said many investors don’t care about in an era of zero interest rates. “The way we value businesses is free cash flow Yield,” he said, adding that he avoided using measures such as accounting earnings because there were “too many tricks” involved. “We generally don’t get into crowded stocks,” he added. “Because they’re expensive. So over time, that gives us a very differentiated profile. It allows us to outperform over the long-term.” Although he’s “okay” about three to nine months of underperformance , but his aim is to always stay close to the top level. “So if you take a growth fund and a value fund and put them together, what we’ve done is a baby,” he said. As an investor, Cvetanovski, who lives in Sydney, Australia, said he invests only in his own 34-stock fund, the Pella Global Generations Fund. Any additional money he has will be reinvested in Pella Funds, the company he started in 2021. “It makes perfect sense for me to invest my money in these 30 quality businesses that will continue to grow over the next five years, no matter what happens,” he said. As of May 31, his fund had the largest holdings (12% of which were in cash): 3i Group, Adobe, Alphabet, ASML, IQVIA, JD Sports Fashion, Marsh & McLennan, Novo Nordisk and UnitedHealth. Investing “isn’t going to be as simple as it used to be,” and Cvetanovski said his approach to investing has remained “exactly the same” over the years. “The approach is the same. Everything I’ve done, I’ve been doing before the GFC … After the GFC, the low interest rate environment hasn’t changed anything. I’m very happy with the way we’re investing,” he said. explain. But he said the past 10 years “wouldn’t have been as simple as it used to be,” when “you said just buy stocks because interest rates were zero.” Still, he said he would put most of his money into stocks because he believed there were still There is growth and good valuations. “I think you can still get performance if you just avoid the top seven stocks,” he said, referring to the seven large tech stocks that have dominated S&P 500 returns for much of this year. “Everyone has them. Time to really do some work and look elsewhere.” “Best Places to Invest” So what’s a cheaper way to buy growth? Cvetanovski cited the electric vehicle industry as an example. “Why would you buy Tesla, which is overvalued right now, when you can play the electric car business by buying something cheaper, like copper and lithium … or the battery business,” he said. “So if Tesla If the electric car is successful, you don’t have to pay, you can now have something cheaper and make more money, which is copper,” he added, saying that a large amount of copper is the transition to electric vehicles and the transition to reliable. needed for the transition to renewable energy. “We think the best place to invest right now is commodities,” he said. He added that China is currently quite cheap and is attracted to companies in its electric vehicle industry. U.S.-listed companies are more expensive than “equal quality” companies in Europe, which he says are more valuable, he said. However, ethical investing Cvetanovski isn’t about gaining at all costs. He says he avoids industries he considers harmful, arms and tobacco companies — even fast fashion. “I really don’t like some of these trends, I think they’re very harmful. So I do think the world needs to go back to good products that consume less but last longer,” he said. Following sustainability standards is one of the goals of the Pella Global Generations Fund. That means excluding companies from so-called harmful industries – which also include casinos and alcohol – and maintaining carbon intensity targets. He added: “We believe that in the longer term, more and more managers will end up managing money in a way that considers the company’s ESG approach.”