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GAM Emerging Markets Equity

Reasons to Invest

Secular and cyclical drivers

Emerging markets (EM) may offer sustainable growth and a superior risk-return profile versus developed markets.

Re-rating potential

Nearly all of the top ten EM countries are now rated investment grade and emerging markets are viewed as a ‘safer’ investment than a decade previously.

Broad appeal

EM valuations are at relatively attractive levels versus history and developed markets, and offer a diverse set of opportunities for value, growth and ‘searching for yield’ investors.

Alpha generation

EM equities typically have more valuation disruptions than other asset classes, hence an active approach using strong fundamental tools can enhance risk-adjusted returns.

Our Edge

Experienced team

Three senior portfolio managers with a successful track record of managing EM equities and over 57 years’ combined investment experience.

Structured, repeatable process

The team believes this is essential to consistently source and exploit the frequent mispricing opportunities that occur in emerging markets.

Flexible approach

The team’s style agnostic approach enables them to exploit opportunities in both value and growth stocks from a dynamic emerging markets index.

Strong ESG focus

The team has been engaged with corporate governance for over 20 years; ESG is used as a risk mitigator and alpha enhancer and is integrated into all levels of the investment process.

Process

Investment Philosophy

The team believes EM equities present frequent mispricing opportunities due to regulatory, political, geopolitical, credit and structural changes that occur as emerging markets grow and mature. They believe an effective approach to profiting from such market inefficiencies is to apply a consistent and repetitive process that combines bottom-up and top-down inputs to identify and exploit mispricing opportunities as they arise.

Investment Process

The team’s proven investment process combines proprietary modelling tools with qualitative judgement. Top-down models analyse macro influences, while fundamental bottom-up valuation screens highlight the most undervalued and overvalued stocks across the universe. The team analyses each company and cross-references this with company visits and independent third party research, while incorporating an ESG integrated methodology. The result is a set of mispriced stocks and attractive risk/return opportunities available for the team to actively construct a diversified portfolio of circa 40 high-conviction positions and 100-160 smaller positions. The team uses a cross asset class perspective in order to size positions and country exposures, while maintaining strong risk awareness.

1. Top-down analysis

  • Proprietary Value, Momentum, Risk (VMR) tool identifies attractive countries
  • Timing, sizing and currency overlay decisions made

2. Bottom-up valuation screening

  • Identifies most overvalued and undervalued stocks
  • ESG criteria fully integrated

3. Stock analysis

  • Highlights anomalies and best risk/return opportunities
  • Continuous analysis based on company financials and meetings

4. Portfolio construction and risk management

  • Blends conviction trades vs acceptable tracking error
  • Dynamic diversification and active risk management

Investment Team

GAM’s Emerging Markets Equity team is led by experienced portfolio manager, Tim Love, with co-managers Joaquim Nogueira and Rob Mumford. Tim has a deep connection to emerging markets, having spent his formative years living overseas and has built over 30 years’ industry experience. Joaquim has worked with Tim for over 20 years, and together they have refined their investment approach by leveraging their complementary skillsets.

Their shared passion for emerging markets has enabled the team to capture significant long-term growth potential, as well as successfully navigate volatile market environments.

Since 2003, the team has also utilised the resources of a dedicated consulting firm, Crisil. It provides valuation screening/regression analysis and robust operational assistance, enabling the team to maximise its focus and efficiency.

The depth of our experience and strong skillset in identifying and exploiting EM mispricing opportunities, is evidenced by a track record of consistent, excess returns
Tim Love, Investment Director.

Our Thinking

Investment Opinions 6 min read

VARPS remains compelling

22 October 2019

GAM Investments’ Tim Love reflects on the performance of his frontier market plays, Vietnam, Argentina, Romania, Pakistan and Saudi Arabia (VARPS) so far this year and discusses the investment opportunities and risks associated with these economies.

6 min read
Investment Opinions 5 min watch

GAM Talks Q3 2019: What themes are you currently playing?

1 August 2019

We asked a group of our portfolio managers a series of questions about their respective asset classes. This third video, in a series of three, looks at the investment themes they are exploring.

5 min watch
Investment Opinions 9 min read

Patience required for EM Equity outperformance, but stage is set

25 July 2019

With the global market environment still being distorted by the consequences of QE, GAM Investments’ Tim Love outlines three different scenarios for emerging market equities which could signal a take off point.

9 min read

Fund Information

Key Risks

Capital at risk

All financial investments involve an element of risk. Therefore, the value of the investment and the income from it will vary and the initial investment amount cannot be guaranteed.

Counterparty risk / derivatives

If a counterparty to a financial derivative contract were to default, the value of the contract, the cost to replace it and any cash or securities held by the counterparty to facilitate it, may be lost.

Leverage Risk

Derivatives may multiply the exposure to underlying assets and expose the Fund to the risk of substantial losses.

Credit risk / structured products

Should the counterparty to a structured note default, the value of those structured notes may be nil.

Currency Risk

The value of investments in assets that are denominated in currencies other than the base currency will be affected by changes in the relevant exchange rates which may cause a decline.

Currency Risk [non base currency share class]

Non-base currency share classes may or may not be hedged to the base currency of the Fund. Changes in exchange rates will have an impact on the value of shares in the Fund which are not denominated in the base currency. Where hedging strategies are employed, they may not be fully effective.

Market Risk / Emerging Markets

Emerging markets will generally be subject to greater political, market, counterparty and operational risks.

Equity

Investments in equities (directly or indirectly via derivatives) may be subject to significant fluctuations in value.

Shanghai-Hong Kong Stock Connect / Shenzhen Connect Risk

The Fund may be investing in China A Shares via the Shanghai – Hong Kong Stock Connect / Shenzhen Connect which may entail additional clearing and settlement, regulatory, operational and counterparty risks.

Resources

Fund Profile - GAM Emerging Markets Equity

Risk management at GAM

Contacts

GAM Multistock - Emerging Markets Equity is a sub-fund of Gam Multistock, registered office at 25, Grand-Rue, L-1661 Luxembourg, an umbrella investment company.