The Fund aims to outperform its benchmark by 3%-4% (before fees) over rolling three-year periods from exposure to Emerging Markets equities across the market cap spectrum.
The Ashmore Emerging Markets Equity Fund is an Australian Feeder Fund, which invests primarily in an AUD unhedged share class of the Ashmore SICAV Emerging Markets Equity Fund (the Underlying Fund), managed by Ashmore Investment Management, a UK domiciled investment manager headquartered in London which specialises in Emerging Markets asset classes.
Emerging markets are highly inefficient – complicated governance structures, evolving macroeconomics and immature institutions lead to elevated stock price volatility. This creates significant alpha generation opportunities, as well as challenges, for active investors.
Opportunities to generate alpha are amplified by the fact that emerging market companies are poorly researched, in particular for their medium-term fundamentals. As a result, high quality businesses are often undervalued and trade at prices that fail to reflect their ability to sustain high returns over the long term.
Ashmore’s team seeks to invest in companies that possess or represent ‘enduring quality’; companies with enduring quality typically share four important characteristics:
- High and sustainable return on capital
- Strong predictable cash flow generation
- Robust balance sheet
- Skillful management and good governance
The investment approach is primarily bottom-up driven. It employs fundamental and quantitative tools to narrow the wider investable universe to identify a focus list of stocks that display truly sustainable competitive advantages.
Top-down analysis is a form of idea generation as well as risk control. In-depth stock research is carried out, generating a stock rating and recommendation, which in turn drives portfolio construction. This results in a high conviction portfolio of around 60-80 best ideas.
Ashmore’s disciplined and systematic investment process is a source of competitive advantage. It helps to mitigate behavioural biases, focus analytical resources and deliver sustained outperformance.
Key features of the Fund
- Exposure to a fund that invests in emerging market businesses from around the globe using an active, benchmark unaware investment approach
- Access to global emerging markets in an Australian dollar fund, which is often difficult to access
- Long-term orientated investors employing a fundamentally-driven investment process to manage a high conviction portfolio
- An all cap approach that leads to an overweight exposure to mid and smaller companies
- Consideration of environmental, social, and governance (ESG) factors is embedded in the team’s quality assessment of each company
- Large, experienced investment team, which also leverages Ashmore’s broader investment platform