DWS Global Thematic: World-Class Performance
It's tough enough to get your arms around the giant U.S. economy and find the most appealing stocks. Running a global fund only multiplies the choices and compounds the complexity. Oliver Kratz, the brainy manager of DWS Global Thematic, makes no attempt to look everywhere for stocks. Instead, he develops and refines global themes to guide his search. "Themes are a way of managing your time and conducting research in the right direction," says Kratz.
The German-born, New York-based fund manager seeks themes that will hold for two to four years and generate returns of least 80% to 100% over that period. Once Kratz settles on a thesis, he scours the world to find the best companies that fit.
Let's look at two of his current themes -- global agribusiness and the importance of talent and ingenuity -- and at some of his investments in each. Kratz, who holds a doctorate from the Fletcher School at Tufts University, says rapid wealth creation in populous China, India, Brazil and southeast Asia is dramatically changing diets in those countries. This in turn is driving demand for animal protein and the feed stocks, such as soybeans, that are used in animal feed.
So Kratz traveled the globe, visiting all parts of the food chain, from farms, grain companies and food processors to seed and fertilizer manufacturers. Some of his agricultural holdings are Monsanto, the leader in seed technology; Archer Daniels Midland, the big corn and wheat processor; and Santos Brasil, which operates a port through which Brazil's soybeans and coffee are exported.
The talent and ingenuity theme is all about intellectual property. "Capital is abundant, ideas are scarce," says Kratz. To select these investments, he scrutinizes companies' patents and research and development budgets. He also calculates which firms' employees are better paid than the industry average, on the assumption that the most talented people will gravitate to the best companies.
The search for companies rich with intellectual talent led Kratz to several drug and medical-device companies, including GlaxoSmithKline, Medtronic and Zimmer. The theme also brought him to such disparate investments as Apple Computer, which is known for its creativity in creation of new high-tech gizmos, and Porsche, the German car maker, which is known for its engineering and design prowess.
Although Kratz's approach can seem somewhat academic, his investment performance is outstanding. Over the past three years to February 1 (he took the helm in August 2003), DWS Global Thematic (symbol SGQAX) returned 22% annualized, an average of eight percentage points per year better than the average global stock fund and good enough to rank in the top 10% of its category. The fund is generally sold with sales charges. Its Class A shares levy a front-end commission of 5.75%.