AGF Emerging Markets Equity Strategy
Approach
Fundamental, bottom-up investment approach.
Cap
All cap
Benchmark
MSCI Emerging Markets Index
Inception Date
June 2003
Key Reasons to Invest
1
For investors seeking exposure to a broad universe of high quality companies in emerging market countries
2
Emerging Market fundamentals are improving at both the company and country level
3
The asset class currently has attractive valuations and a large discount to the developed market
Overview
Strategy
The objective of the AGF Emerging Markets Equity Strategy is to outperform the MSCI Emerging Markets Index. The strategy is actively managed, all cap, style neutral, and utilizes bottom-up security selection combined with a disciplined Country Allocation Framework to select the stocks within the portfolio.
Philosophy
The AGF Emerging Markets Equity Strategy focuses on economic value added (EVA). We believe this will drive long-term returns while controlling risk, and that companies generating returns in excess of their cost of capital create shareholder value. Our long-term investment horizon approach strives to take advantage of what we believe are short-sighted markets. We believe that markets are short-sighted and the differences between winners and losers become differentiated over time. We analyze existing holdings with a view towards the long term.
The result of our investment process reveals emerging market stocks with strong profitability, resulting in sustainable earnings growth prospects not recognized by the market and selling at attractive valuations which drive our disciplined and diversified portfolio construction process.
Process
Our investment process is based on the concept of EVA, which focuses on finding companies that over time will exhibit characteristics such as strong/growing cash flow generation, sales, margins, and/or asset utilization.
Our process is underpinned by fundamental stock selection and aided by our disciplined country allocation framework, with an awareness of the macroeconomic conditions through country analysis. Our emerging markets universe includes the MSCI Emerging Markets Index and Hong Kong, for a total of 27 countries.
The country universe is scored and ranked for valuations, growth/sentiment, and risk. A minimum market cap of US$500 million is applied in the security screening process. The remaining universe is then ranked based on historical and prospective valuation, growth, and sentiment characteristics.
We apply an EVA screen to the resulting universe to uncover companies that have the ability to generate a return on investment that exceeds the company’s cost of capital. From there, selected names are reviewed using in-depth fundamental analysis to uncover companies with strong businesses and management, unrecognized growth potential, and attractive valuations. The portfolio manager imposes disciplined controls at the country, sector, company, and portfolio level.
Investment Process
- 27 countries
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1. Country Allocation
- Screen: Liquidity, Political Risk
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2. Company & Stock Analysis
- Investable Universe: 900 – 1,000 companies
- Screen: Liquidity, Valuation, Growth/Sentiment
- 2,000 companies
-
3. Systematic Framework
- Valuation, Growth/Sentiment, Risk
-
4. EVA Analysis
- Historical value creation and/or business transformation
- Watchlist: 200 – 250 names
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5. Qualitative Assessment
- Geopolitical, Idiosyncratic Factors
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6. Fundamental Research
- Financial Analysis and Modeling, Valuation
- Identifying a Fundamental Catalyst
- ESG Analysis
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7. Portfolio Construction
- Country: Minimum level of exposure to key markets
- Sector: 8 of 11 GICS sectors
- Company: Maximum 10%
- 50 – 80 names
Investment Team
Regina Chi has lead responsibility for AGF’s Emerging Markets strategies. She looks for quality companies with fundamental catalysts and long-term sustainable competitive advantages at attractive valuations. Regina is a member of the AGF Asset Allocation Committee, a group of senior investment professionals that meet quarterly to discuss, analyze and assess the macroeconomic environment and capital markets to determine optimal asset allocations. She also serves as co-Chair of AGF’s Diversity, Equity and Inclusion Committee, which develops, creates organizational awareness around and promotes DEI best practices across the firm.
Regina brings more than 25 years of international equity experience to this role. Prior to joining AGF, Regina was a partner at a boutique U.S. investment firm, where she served as portfolio manager for the Emerging Markets and International Value disciplines. She was also head of portfolio management and research as they related to Emerging Markets, Global, International and International Small Cap strategies. Prior to this role, she held senior investment management roles at several large and boutique investment firms in the U.S.
Regina is a CFA® charterholder. She received her Bachelor of Arts in Economics and Philosophy from Columbia University. She is also a member of 100 Women in Finance, an organization working to strengthen the global finance industry by empowering women to achieve their professional potential at each career stage.
Portfolio Manager under AGF Investments Inc. and AGF Investments America Inc.
CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.
Abhishek Ashok
M.A., MFE, CFA®
Richard Fisher
M.A. (Econ.)
Georgina Goldring
CFA®
Ling Han
M.Sc., MBA, CFA®
Grace Huang
MBA, CFA®
John Kratochwil
MBA, P.Eng.
Henry Kwok
MBA
Lazar Naiker
Pulkit Sabharwal
MBA
Wai Tong
MBA, P.Eng., CFA®
Wyeth Wright
CFA®
Stephen Way
CFA®
Andres Perez
CIM
Mark Weinberg
ASA, ACIA
The AGF Equity Analyst Team consists of individuals from AGF Investments Inc. Personnel of AGF Investment Inc., an affiliated adviser located in Canada that is not registered with the SEC, provide research services to clients of AGF Investments America Inc through an Affiliate Resource Arrangements.
CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.