Selective was founded on the simple belief that owning high quality businesses over long periods of time would result in superior investment results when compared to the widely adopted concept of broad diversification.
Our founder and Chief Investment Officer, Chris Devlin, discovered his first Selective Company, Markel, more than a decade ago. Formerly a nuclear engineer, Chris began investing on behalf of friends and family in 2009.
While the common mantra is that stock picking is dead, we believe that owning great businesses is not only rewarding but timeless. In fact, the Selective Philosophy has rewarded investors with gains that have outperformed the S&P 500 over the past six years (after fees as of December 31st, 2018)1.
In 2008, Chris attended Markel's shareholder meeting and met a teacher that had invested $10,000 early in his teaching career. The unassuming teacher heartily shook hands with the Markel board that day & made it a point to introduce Chris.
Chris discovered that Markel’s business* grew at a rate of nearly 21% per year for 22 years. Chris calculated that in just 22 years the business grew approximately 65 times larger from the date of the initial public offering. A hypothetical $10,000 investment that grows at an identical rate per year for 32 years would be worth over $4,300,000.
Are there more Selective businesses out there, businesses that have compounded ~20% annually for extended periods of time and are positioned to continue compounding at a similar rate? We believe there are, and many share what we have identified as the 6 common characteristics of a Selective Company.
40-year value of a $10,000 Investment**
Read disclosures here
*Defined as Book Value
** Past performance does not guarantee future results, and a loss of original capital may occur. The return represented above is not indicative of Selective Wealth Management's performance. There is always the inherent risk that Selective Wealth Management will not outperform the market or other investment advisors. The information herein should not be construed as a recommendation to purchase or sell any particular security or an assurance that any particular security held in a portfolio will remain in the portfolio or that a previously held security will not be repurchased. It should not be assumed that any of the security transactions or holdings have been or will equal or exceed the investment performance of the securities discussed.
1Returns based on a composite of accounts primarily invested in Selective’s proprietary mutual fund (Composite A). This composite utilizes an investment approach focused on maximizing long-term returns while protecting client principle. The proprietary Fund is non-diversified and focuses its investments in a relatively small number of Selective Companies, typically seeking to hold between 15 and 25 companies (although the number may vary depending on market conditions). The Fund may also invest a substantial portion of its assets in cash and cash equivalents, including money market funds and other short-term fixed income investments, in seeking to protect principal. All returns are time-weighted, net of all fees and trading expenses. Performance varied by account. Performance 2013 to 2017 has been independently verified.
Today, our clients number in the hundreds and we invest on behalf of individuals & families, for family offices and for institutions across 28 states. But our focus remains unchanged. We identify what we believe to be the world's best businesses and we seek to become long-term owners. While we work with many high net worth families, we still find joy in helping those (much like the teacher Chris met) that may just be starting their investment career. As investors, we seek to be patient stewards that focus on owning debt-free businesses with what we believe to be predictable earnings, strong competitive advantages and long runways for growth. At Selective, we are building a culture that continually places the interests of our clients ahead of our own.