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We believe that emerging markets are only partially efficient and that fundamentally driven, active management of emerging market equity portfolios can add value for clients.

Investment Approach

Team brings fundamental research and sector expertise to analysis of companies in emerging markets. Emphasis on bottom-up stock selection and companies that know how to sustain and accelerate profitable growth. Company selection based on fundamental research and quantitative tools; sector and country allocation derived from individual stock selection. We believe a less concentrated portfolio lowers overall risk without sacrificing performance potential.

Distinguishing Features

  • Sector approach rather than country/regional alignment, with an emphasis on fundamentals
  • Multiple sources of alpha: fundamental and quantitative methods are applied
  • Knowledge-sharing among international portfolio managers integrating investment themes around the globe
  • Focus on good business models that can be replicated, meeting with companies and talking to company management
  • Cohesive investment team averaging more than 15 years of investment experience

Investment Process

Define and evaluate investable universe
  • Primary universe: MSCI Emerging Markets. Up to 20% of the portfolio can be invested in developed or frontier markets that are leveraged to emerging markets
  • Fundamental screening and proprietary quantitative screens on universe establish opportunity set (~500 stocks)
Conduct research and valuation analysis
  • Bottom-up fundamental research drives process; macroeconomic factors are generally assessed as part of company-specific research
  • Fundamental research evaluates company, sector, and regional factors. Team seeks indicators of sustainable long-term growth: improving balance sheets, ability to finance growth internally and sustainable advantage in the marketplace
  • Proprietary quantitative research evaluates earnings quality, price earnings momentum, and valuation
  • Emerging Markets stocks with greatest potential to outperform ranked by quintile
Construct portfolio and manage risk
  • Diversified portfolio of 100-160 holdings
  • +200 bps active stock weight; sector weight ranges of +/-1000 bps, country weight range of +/-1000 bps, and tracking error range of 3%-7%

*as of 6/30/12