Emerging Markets Equity
An all-cap strategy with a domestic growth bias utilizing a bottom-up, research-driven investment process to identify high return on equity businesses trading at attractive prices
- Flexibility to invest across the market capitalization spectrum and outside the benchmark
- Seeks to identify quality businesses and applies a disciplined valuation framework
- Leverages experienced team and an integrated research approach
Market Risk: The risk of a change in the value of a position as a result of underlying market factors, including among other things, the overall performance of companies and the market perception of the global economy.
Liquidity Risk: The risk that the portfolio may be unable to sell an investment readily at its fair market value.
Emerging Markets Risk: Emerging markets are likely to bear higher risk due to a possible lack of adequate financial, legal, social, political and economic structures, protection and stability as well as uncertain tax positions which may lead to lower liquidity. The value of a portfolio may experience medium to high volatility due to lower liquidity and the availability of reliable information, as well as due to the strategy's investment policies or portfolio management techniques.
Stock Connect Risk: The Shanghai/Shengzen-Hong Kong Stock Connect are relatively new trading programmes, where many of the relevant regulations are untested and subject to change at any moment as well as not as active as exchanges in more developed markets which may affect the ability to trade.
Counterparty Risk: The risk that the portfolio may be unable to sell an investment readily at its fair market value.
Operational Risk: The risk of direct or indirect loss resulting from inadequate or failed processes, people and systems including those relating to the safekeeping of assets or from external events.
Currency Risk: Investments in a currency other than the base currency of the portfolio are exposed to currency risk. Fluctuations in exchange rates may affect the return on investment. If the currency of the portfolio is different from your local currency, then you should be aware that due to exchange rate fluctuations the performance may increase or decrease if converted into your local currency.
- Sustainable return on equity and cash flow growth at attractive valuations drives long-term performance
- Domestically-focused smaller cap companies have attractive growth and diversification potential
- Benchmarks not always reflective of underlying domestic economies
- Strategic analysis differentiates our approach
- Companies with principal businesses in Emerging and/or Frontier markets with market caps >$200M and >$2M daily liquidity
Quality Track Record
- Profitability screen: ROE > 15%
- Financial strength screen: Net Debt/EBITDA <2.5x
- Attractively valued: Price/cash flow < 3 year cash flow growth
- Competitive positioning and industry analysis
- Histroically averaged approximately 1,000 company meetings annually at our offices and on-site, through extensive travel
- Meet with competitors, suppliers and clients
- Assess corporate governance, regulatory, political and macroeconomic risk
- Proprietary cash flow models
- Analyze sensitivity to cash flow growth assumptions
- Establish price targets for security
- Measure risk at the security and portfolio level
- Minimum upside potential of 50% over 3 years for a security
- Position size based on level of conviction