The meeting with the fund manager was to discuss the launch of the Emerging Market Discovery Fund which is a small and mid-cap strategy. Mark has managed the Small Cap Strategy since 2010, and since launch has not only outperformed the smaller cap index but also the broader EM index. Smaller cap has struggled in recent years, but he believes the small cap fund is perfectly positioned for a rebound.
The new strategy will have about a 38% overlap in holdings but will enable Mark to go up the spectrum in term of company size. It will follow the same strategy of a focused portfolio of around 40 holdings with a holding period of 3 to 5 years.
There are four fundamental risks that they focus on. Business, in this case they are looking for those businesses with a sustainable competitive advantage to support profitable growth. Financial, low leverage and a history of good capital management to grow equity over several cycles. Governance, alignment of interests between minority investors, owners and other stakeholders. Valuation, taking a longer-term view than the market…..read more