Author
Viljar Vald, CIO
Date
16/04/2026
The inaugural full year of Sarto Capital Management has drawn to a close. While a year is but a single step in a much longer journey, it serves as a vital milestone for reflection. Since our launch in late March 2025 through the close of March 2026, the strategy has delivered a total return of 14.8%, outperforming the global market by 5.9%. [1]
Source: Sarto Capital Management calculations.
But the real victory of this year wasn't the number itself; it was the fact that we achieved it by doing things significantly differently than the average. And as anyone who has pursued a non-consensus path knows: doing things differently can often feel slightly uncomfortable.
Our approach is built on a simple, three-part logic: be grounded in evidence, be structured for resilience, and have the discipline to stay the course.
1. Grounded in Evidence: The "Better Basket"
We believe that owning high-quality companies at attractive prices provides the highest likelihood of compounding wealth over the long term. This is not a "story" or a hunch; it is a philosophy grounded in common sense and decades of empirical data.
We don’t gamble on speculative trends. We buy businesses. Using a rigorous fundamental systematic selection process across global developed markets, we ensure our basket of companies is:
· Structurally superior: Our companies generate significantly more profit for every unit of equity than the average firm.
· Financially robust: We prioritize firms with far less debt than the market average.
· Attractively priced: We acquire these champions at a discount relative to the general market and their underlying fundamentals.
If we had to own a single business for ten years, we would choose the one with high profits and low risk at an attractive valuation. We simply do that more than a thousand times.
2. Structured for Resilience: The 200/100 Engine
To get results that are significantly better than average, you cannot follow an average path. We utilize a 200/100 active extension structure to tilt the math of the portfolio in our favor. This is an architecture built for both performance and resilience.
Think of it as intensified opportunity. For every €1 invested, we put €2 into our "better basket" of companies. To balance this, we bet against €1 of the "junk"—the debt-laden and unprofitable zombie firms that clutter the market.
The result of our first full year was a realized beta of approximately 0.6. This means we captured the market’s growth while structurally insulating our portfolio from nearly half of its volatility. But make no mistake, being different can cut both ways, especially over the shorter term. The true test of a ship isn't how it performs in a harbor, but how it runs in a headwind.
3. Staying the Course: The Behavioral Moat
The hardest part of investing isn’t the math; it is the discipline of staying the course. In a world of 24-hour headlines, the pressure to "tinker"—to add new metrics or to change rules to catch a short-term rally or avoid a temporary loss—can be quite intense. This has been evident in the recent rough patch in early April, when speculative, low-quality stocks rallied on relief headlines.
But we don’t flinch. If you change your rules because of daily noise, you aren't a systematic manager; you’re just a discretionary trader who’s lost his nerve. We choose persistence over prediction.
· Prediction is a guess about what happens "next Tuesday."
· Persistence is the rule that says, over a decade, superior profits at reasonable prices win the race.
Occasionally, when the market "dashes for trash," we simply wait for the scale to turn back on. We know the market might be a voting machine today, but it is a weighing machine over the longer term. But one shouldn’t mistake this for blind trust or complacency; our models are dynamic and evolving in nature, and we keep a sharp eye on the data to ensure that if a structural shift occurs, we recognize it and adapt accordingly.
The Path Forward: The Coiled Spring
We enter year two with the perspective of our first major milestone and a portfolio that remains fundamentally strong. The companies we own are profitable, resilient, and—crucially—trading at valuations that we believe represent a significant opportunity for the patient investor over the long term.
Ultimately, we choose to stand apart from the crowd. We acknowledge, as some before us, that prediction is difficult—especially about the future. Instead of guessing, we rely on persistence. We hold that principles which have stood the test of time are far more likely to endure than the market fads of the moment.
We aren't managing for the noise of the day. We are managing for the destination of the decade.
[1] In EUR; Global market benchmark is MSCI World Net Total Return EUR Index
General disclaimer
The information on this site is provided for general informational purposes only. Nothing on this site constitutes, or is intended to constitute, an offer to sell or market any interest in any investment opportunity. It also does not constitute an advertisement of, or an offer to provide, any investment management or advisory product or service.
Regulatory status
Sarto Capital Management OÜ is registered with the Estonian Financial Supervision Authority (Finantsinspektsioon) as a small alternative fund manager. However, it is not an authorised fund manager and is not subject to ongoing supervision by the Estonian Financial Supervision Authority.