Investment Strategy

Investment Strategy 2017-03-28T16:11:47+00:00

The Emerging Markets Masters Fund is a leading ASX listed investment trust focused on investing primarily in listed companies in emerging markets through a multi-manager approach. Emerging markets broadly comprise countries in Africa, Central and Eastern Europe, Latin America, the Middle East and Asia (excluding Japan).

The key investment objectives of the Fund are:

  • To achieve a high real rate of return on invested capital, primarily through capital growth, and within acceptable risk parameters; and
  • To maintain long-term exposure to emerging and frontier markets equities, while maintaining broad diversification

The Investment Manager employs a hybrid investment approach, combing the asset allocation skills of the Investment Manager and Advisory Board with the stock-picking skills of high quality underlying emerging market equity funds.

The Investment Manager believes it is difficult for a team based in Australia to cover the depth and breadth of emerging equity markets, and for this reason it has employed a multi-manager approach, investing in a portfolio of high-quality emerging market equity funds.

The Fund aims to invest in a diversified portfolio of underlying funds managed by highly experienced emerging markets equity fund managers that have strong investment track records in both bull and bear markets. The Fund invests in both global and regional funds, as well as single country funds. The Investment Manager believes that global and regional funds can provide relative value perspectives across the different markets, while single country fund managers have greater depth of insights in local markets, allowing them to invest further down the market capitalisation scale.

The Fund takes a differentiated approach to investing in emerging markets, unconstrained by arbitrary or outdated views on what constitutes an emerging market. The Fund is “index agnostic”, targeting investments in emerging and frontier markets in which the Investment Manager sees the greatest investment opportunities.

The Fund is diversified across core, satellite and frontier countries as follows:

  • Core countries are countries that the Fund intends to consistently have exposure to. Current core countries include China, Brazil, Russia, India, Mexico and South Africa.
  • Satellite countries are countries that the Fund may hold exposure to. The Fund may also have a zero weighting to satellite countries. Current satellite countries include Chile, Colombia, Czech Republic, Egypt, Greece, Hungary, Indonesia, Korea, Malaysia, Peru, Philippines, Poland, Qatar, Taiwan, Thailand, Turkey and United Arab Emirates.
  • Frontier countries are the smaller and least developed countries that the Fund may invest in. The Fund’s maximum weighting in frontier countries as a whole is 25% of the net assets of the Fund at the time of investment. Frontier countries are emerging economies which are not core or satellite countries. Frontier countries include (but are not limited to) Argentina, Bangladesh, Botswana, Cambodia, Costa Rica, Croatia, Georgia, Ghana, Kenya, Mauritius, Nigeria, Pakistan, Romania, Saudi Arabia, Senegal, Sri Lanka, Tunisia, Vietnam and Zimbabwe.

Risks

Like all investments, an investment in the Fund carries risks which may result in the loss of income or principal invested. In addition to the general risks of investing, specific risks associated with investing in the Fund include, but are not limited to, emerging and frontier market equity risk, sovereign risk and currency risk. For further information about the risks of investing in the product see Section 5 in the Product Disclosure Statement.