AGF Emerging Markets Equity Fund
Important information: Effective March 21, 2024, the AGF Emerging Markets Equity Fund is closed to new investors. New account requests and exchanges into the Fund are no longer accepted. The AGF Emerging Markets Equity Fund will liquidate on or around April 30, 2024. Please see Prospectus Supplement dated March 21, 2024 in the “Resources” section below.
Approach
Fundamental, bottom up approach.
Cap
All cap
Benchmark
MSCI Emerging Markets Index
Inception Date
January 3, 2020
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 markets.
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, 2,000 companies
-
1. Country Allocation Framework
Screen: Liquidity; Political Risk
Rank: Valuation, Growth/Sentiment, Risk -
2. Initial Analysis and Filter
Screen: Liquidity (minimum market cap of US$500M)
Rank: Attractive Valuation; Growth/Sentiment
Universe: 900-1,000 companies -
3. EVA Analysis
Ability to generate future economic profits driven by historical value and/or business transformation
Universe: 200-250 companies -
4. Fundamental Research
- Sound management and fair value
- Distinct competitive advantage
- Historical financial analysis
- ESG analysis
- Identifying company-specific catalysts
-
5. Portfolio Construction
Disciplined and DiversifiedCountry: Minimum level of exposure to key markets
Sector: 8 of 11 GICS sectors
- 50 - 80 names
Resources
Before investing you should carefully consider each Fund's investment objectives, risks, charges and expenses. This and other information is in the Fund's prospectus. Click here for prospectus or call 1-833-AGF-FUND (833-243-3863).
RISKS: Investing involves risk including loss of principal. Equity securities are volatile and can decline significantly in response to broad market and economic conditions. Investments in foreign securities involve risks that differ from investments in securities of U.S. issuers because of unique political, economic and market conditions. Foreign markets, especially those in less developed economies, are generally more illiquid than U.S. markets. China Risk and Hong Kong Risk, investing in securities of issuers located in or economically tied to China or Hong Kong involves certain risks and considerations, including, more frequent trading suspensions (by the government or the issuer itself), government interventions, nationalization of assets, currency exchange rate fluctuations or blockages, limits on the use of brokers and on foreign ownership, different financial reporting standards, higher dependence on exports and international trade, potential for increased trade tariffs, embargoes and other trade limitations, and custody risks. Liquidity risk exists when investments are difficult to purchase or sell. This can reduce the Fund’s return because the Fund or an entity in which it invests may be unable to transact at advantageous times or prices. The less developed the market, the riskier the security. Such securities may be less liquid and more volatile.
Additional risks of the Fund include but are not limited to: Portfolio Management Risk, Foreign Currency Risk, Frontier Market Risk, Equity-Linked Investment Risk, Depository Receipts Risk, Exchange-Traded Funds and Other Investment Companies Risk, Repurchase and Reverse Repurchase Agreements Risk, Credit Risk, U.S. Gov Securities Risk, Large Shareholder Risk, Small Fund Risk, Non-Diversification Risk.
The MSCI Emerging Markets Index captures large and mid cap representation across 24 Emerging Markets (EM) countries.
Distributor: Foreside Fund Services, LLC
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