Diversified exposure to emerging markets, capturing value and growth

The Fund normally invests at least 80% of its total assets in equity securities of companies located in emerging markets and investments that are tied economically to emerging markets, such as common stock, preferred and preference stock, depositary receipts, including American Depositary Receipts, Global Depositary Receipts, European Depositary Receipts, Swedish Depositary Receipts and other types of depositary receipts, real estate investment trusts (“REITs”) and exchange-traded funds (“ETFs”) that invest in emerging markets securities. The Investment Manager primarily invests in common stock, but will use those other security types referred to above if, for example, they provide greater liquidity, the Fund cannot access common stock through a local market, or the yield rate of preferred or preference stock is deemed favourable. Typically, less than 10% of the Fund’s Net Asset Value will be invested in ETFs, and investment in ETFs will be limited to 15% of the Fund’s Net Asset Value.

The Fund generally invests in companies with market capitalisations of US$500 million or greater at the time of investment. However, the Fund may invest in smaller market capitalisation companies if, based on the quantitative investment approach described below, it finds an attractive investment with a lower market capitalisation and sufficient liquidity. The Fund may invest in any industry or sector, but generally will not invest more than 25% of its total assets in the equity securities of companies in a single industry. Typically, the Fund will hold a diversified portfolio of over 80 equity securities.

The Investment Manager uses a quantitative investment approach to purchase and sell equity securities and those other investments as detailed above for the Fund. The Investment Manager’s quantitative investment approach uses a proprietary computer model that analyses historical financial data, or “factors,” to assist in selecting investments as detailed above. The model currently analyses “stock specific” factors relating to valuation, growth, technical indicators (such as stock price momentum), competitive strength, and “top-down” factors relating to macroeconomics, currency, country and economic sector. Currently, the valuation factor category receives the highest overall weight in the model and stock-specific factors comprise approximately 75% of the score for a company. For each stock, the relative weight assigned to each stock-specific factor differs depending on its classification (for example, value, growth, momentum, capitalisation or other classifications). The relative weights of these stock-specific factors are sometimes referred to as “contextual weights.”. As the Investment Manager is continually seeking to improve model performance, the factors and their weightings in the model may change over time, or if the classification of a stock changes. By ranking companies based on a combination of these factors, the Investment Manager seeks to identify a portfolio of investments that will outperform the MSCI EM Index. In addition to its quantitative research, the Investment Manager’s fundamental research analysts review the quantitative outputs to attempt to identify and address special issues, such as significant corporate actions or management changes, which are difficult to detect quantitatively.

Please see the Prospectus and Supplement for more information. Please contact [email protected] for a Fund Application.

Nav*
€19.67
Inception
February 10, 2016
ISIN
IE00BWT3P209
Benchmark
MSCIEmergingMarketsinUSD
Minimum investment
€1,000,000
Total expense ratio
1.24%
*As of July 23, 2024
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Strategy overview

The portfolio managers discuss our Emerging Markets strategy.

Portfolio managers

Quantitative Portfolio Manager
Head of Quantitative Research
Quantitative Portfolio Manager
Quantitative Portfolio Manager
Quantitative Portfolio Manager

Performance

QTD YTD 1 year3 years Since inception
Fund 10.4%22.3%30.4%2.9%8.8%
MSCI Emerging Markets in EUR 5.9%11.0%15.0%-1.4%8.4%
QTD YTD 1 year3 years Since inception
Fund 10.4%22.3%30.4%2.9%8.8%
MSCI Emerging Markets in EUR 5.9%11.0%15.0%-1.4%8.4%
2023202220212020201920182017
Fund 14.8%-17.5%4.7%6.4%18.4%-14.4%21.1%
MSCI Emerging Markets in EUR 6.5%-14.5%5.2%8.9%21.1%-9.9%21.0%
2023202220212020201920182017
Fund 14.8%-17.5%4.7%6.4%18.4%-14.4%21.1%
MSCI Emerging Markets in EUR 6.5%-14.5%5.2%8.9%21.1%-9.9%21.0%

Portfolio (as of June 30, 2024)

Benchmark:
Asset Allocation
Fund
Stocks 98.6%
Cash 1.4%
Fund Characteristics
Fund Benchmark
Holdings 185 1330
Weighted avg. market cap (US $MM) $114,661 $117,127
NTM price/earnings 8.2 11.3
Price/book value 1.3 1.8
NTM EPS revision (wtd. avg.) 23.76 14.94
Net assets $6,023,257.34 -
TOP 10 ACTIVE HOLDINGS
Security Country Active weight*
Kia Corp. South Korea 1.8%
China Construction Bank Corp. China 1.8%
REC Ltd. India 1.5%
Hon Hai Precision Industry Co., Ltd. Taiwan 1.4%
Cosco Shipping Holdings Co China 1.2%
Banco do Brasil SA Brazil 1.0%
Asia Vital Components Co., Ltd. Taiwan 1.0%
Koç Holding A.S. Turkey 1.0%
Shriram Finance Ltd. India 0.9%
PetroChina Co., Ltd. China 0.9%

A "weighted average” measures a characteristic by the market capitalization of each stock. Price/book ratio is the weighted average of the price/book ratios of all the stocks in a portfolio. The P/B ratio of a company is calculated by dividing the market price of its stock by the company’s per-share book value. The price/earnings ratio is the weighted average of the price/earnings ratios of the stocks in a portfolio. “Earnings-per-share” is the portion of a company’s profit allocated to each outstanding share of common stock. “Earnings-per-share year-over-year estimate growth (next 12 months)” is the average next-12-months earnings-per-share estimate from one year ago for an individual company compared with that estimate today; note that this calculation is done on a company-by-company basis and is aggregated through a weighted average based on the individual company’s weight in the corresponding index. Also note that this characteristic is supplied directly by MSCI.

*Active defined as Fund weight minus MSCI EM Index weight. Holdings are subject to change.

SECTOR WEIGHTS
Sector Fund Benchmark
Information Technology 25.9% 25.1%
Financials 16.2% 21.9%
Consumer Discretionary 14.5% 12.3%
Industrials 13.9% 6.9%
Communication Services 10.2% 8.9%
Energy 6.2% 5.2%
Materials 2.9% 6.9%
Utilities 2.9% 3.0%
Health Care 2.9% 3.2%
Consumer Staples 2.3% 5.2%
Real Estate 0.7% 1.5%
TOP 10 COUNTRIES
Country Strategy Benchmark
China 25.7% 25.1%
Taiwan 21.9% 19.4%
India 20.3% 19.2%
South Korea 16.6% 12.2%
Brazil 4.7% 4.2%
Turkey 3.2% 0.8%
Saudi Arabia 1.1% 3.9%
United Arab Emirates 1.0% 1.1%
Indonesia 0.9% 1.6%
Poland 0.8% 1.0%
Regional Allocation
  • Emerging Asia 86.8%
  • Emerging Europe, Middle East, Africa 6.5%
  • Emerging Latin America 5.3%

Commentary (As of May 31, 2024)

Highlights

  • Emerging markets (“EM”) equities trailed developed markets in May as investors looked towards election results in India and Mexico.
  • The recent Indian general election produced unexpected results that have significant implications for the country's political landscape. The Narendra Modi-led Bharatiya Janata party (“BJP”) underperformed in the Indian general election, despite exit polls forecasting a strong win. For Modi’s upcoming third term, economic reforms may be harder to implement as Modi will need alliance support, potentially leading to more populist measures like subsidies and cash handouts. We remain confident in our India exposure due to valuation support—the portfolio’s Indian stocks currently trade at significant price-to-earnings discounts versus the MSCI India Index. Market volatility may provide repositioning opportunities.
  • Within EM, we continue to identify, in our view, attractive investment opportunities in small cap companies. Historically, our investment process has uncovered EM small cap stocks with alpha potential. The Portfolio’s allocation to small cap stocks remains near the high end of the historical range.

Portfolio Attribution

The Fund outperformed the Index in May 2024. We use both bottom-up “stock-specific” and top-down factor categories to seek to forecast alpha for the stocks in the Portfolio’s investable universe. Our valuation, technical (price momentum), competitive strength, growth, and corporate events factors were positive indicators in May. Our top-down macroeconomic and currency factors were positive indicators, while country/sector aggregate was a negative indicator during the month.

Quarterly Investment Outlook

The South Korean government has introduced its Corporate Value-Up program with the goal of increasing valuations for companies trading significantly below book value. However, given the voluntary nature of the program, we believe the long-term efficacy of the initiative remains questionable. While the Portfolio has an overweight position in South Korean stocks, we have been reducing eposure due in part to valuation considerations. In Turkey, the central bank hiked its target interest rate by 500 basis points in March, signaling its commitment to reigning in inflation. This action helped to allay concerns that President Recep Erdogan would interfere with the central bank’s price stability objective in order to spur slowing growth. The Portfolio was overweight Turkish stocks at quarter-end as compelling bottom-up characteristics more than offset the country’s challenging, but improving, top-down headwinds.

The Portfolio is also overweight Indian stocks, reflecting attractive bottom-up and top-down characteristics in the country. The recent Indian general election produced unexpected results that have significant implications for the country's political landscape. The Narendra Modi-led Bharatiya Janata party (“BJP”) underperformed in the Indian general election, despite exit polls forecasting a strong win. For Modi’s upcoming third term, economic reforms may be harder to implement as Modi will need alliance support, potentially leading to more populist measures like subsidies and cash handouts. We remain confident in our India exposure due to valuation support—the portfolio’s Indian stocks currently trade at significant price-to-earnings discounts versus the MSCI India Index. Market volatility may provide repositioning opportunities. Within EM more broadly, we continue to identify, in our view, attractive investment opportunities in small cap companies. Historically, our investment process has uncovered EM small cap stocks with alpha potential. The Portfolio’s allocation to small cap stocks remains near the high end of the historical range.

The market commentary expresses the portfolio managers’ views as of the date of this report and should not be relied on as research or investment advice regarding any stock. These views and the Fund holdings and characteristics are subject to change. There is no guarantee that any forecasts made will come to pass. Any securities identified and described in this report do not represent all of the securities purchased, sold or recommended for client accounts. The reader should not assume that an investment in the securities identified was or will be profitable. Diversification does not protect against market loss. Current and future holdings are subject to risk.

Documents

Fund information: