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Global Emerging Markets (ex China) Leaders
The strategy launched in 2024 and seeks to invests in between 25-45 high-quality emerging markets companies with a total stock market value of at least US$1 billion, but excluding China.
The Global Emerging Markets (ex China) Leaders strategy seeks to invest in 25-45 high-quality companies with exceptional cultures, strong franchises, and resilient financials outside of mainland China. It aims to achieve attractive long-term capital growth and contribute to a more sustainable future across global emerging markets.
It was launched in July 2024, reflecting investor appetite for global emerging market specialist funds without allocations to China, as well as pockets of concern over perceived investment risk and volatility in China.
Leaders simply means that the strategy is focused on companies with a market cap value of at least USD1 billion at the time of investment.
Strategy highlights: a focus on quality and sustainability
- Companies must contribute to sustainable development.
- We invest in high-quality companies with exceptional cultures, strong franchises and resilient financials. How we pick companies >
- We avoid companies linked to harmful activities and engage and vote for positive change. Our position on harmful products >
- Our approach is long-term, bottom-up, high conviction and benchmark agnostic
- We focus on capital preservation as well as capital growth – we define risk as the permanent loss of client capital
Latest insights
Quarterly updates
Strategy update: Q3 2024
Global Emerging Markets (ex China) Leaders strategy update: 1 July - 30 September 2024
This strategy launched during the quarter. We have found that asset allocators tend to have a bifurcated view on China, sometimes choosing to allocate large amounts of capital to China separately and sometimes choosing to avoid the region entirely. By launching this strategy, we are not making any sweeping statement about what we expect to happen in China in the years ahead. We are simply cognisant of the approach that some clients take and with our history of having limited amounts of capital allocated to China in our GEM All-Cap and Leaders strategies, we think we are well positioned to also manage this strategy.
Most of the quarter’s activity happened in September, as is often the case. It is in such moments, like the biggest market moves since 2009 in China and Hong Kong and rising geopolitical tensions in the Middle East, that we remain grateful for our long-term philosophy. It gives us the ability to step back in moments of such volatility and reminds us to focus on the more important, bottom-up drivers for the companies we own on your behalf.
We have not made any new purchases since launch on 11 July but we have sold out of one position, Kotak Mahindra Bank (India: Financials). We have seen Kotak, and other banks, finding it harder to attract deposits that will allow it and the others to keep growing loans at a fair clip that warrants the valuations the bank is currently on. It used to be the case that public sector banks were so discredited that no depositor would want to risk their savings at one of these state-owned banks. But this sector has been really cleaned up, which is great for the Indian consumer but makes for a more difficult competitive environment for the private sector banks, including Kotak. With growth looking muted and residual concerns about management, we decided to sell our holding.
An area where we are doing a lot of thinking is Poland. Here we hold Allegro (Poland: Consumer Discretionary), Dino Polska (Poland: Consumer Staples) and Jerónimo Martins (Portugal: Consumer Staples), which is listed in Portugal but >50% of revenues are from its Biedronka business in Poland.1 They all experienced strong growth through 2022 and 2023 as inflation helped them increase profit margin but the opposite has now happened. Deflation in food prices and rising costs have squeezed profit margins considerably.