The fund is run by the two portfolio managers and heavily supported by the 14-strong analyst team. The stock selection process is framed by top down considerations, as risks such as currency issues and political instability are much greater than in developed markets. This framework focuses the research on 20-30 countries which have the most stable outlooks and growth potential. They do not rely on quantitative screening as this has a natural bias towards the more liquid SOEs, which tend to have poor corporate governance; the key quality they look for are management teams genuinely working in the interests of shareholders. Therefore, the majority of the investment process is focused on meeting companies, as this is an asset class where well run companies are much harder to find. Before they invest in a company, they will typically conduct 9-10 meetings with management, competitors and suppliers.
We like the fund due to the large analyst team with a combined experience of more than 140 years, and the portfolio managers themselves have over 25 years focused on emerging and frontier markets. In addition, the firm’s reputation as specialists in these markets grants them excellent access to company management and at times access to senior government officials, giving them unique insight into the companies they invest in and the economic cycle of the countries.