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GAM Emerging Markets Equity

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GAM Emerging Markets Equity seeks consistent alpha with strong risk-adjusted returns through investment in a diversified portfolio of long only emerging markets stocks, in addition to frontier plays. GAM’s Emerging Markets Equity team uses a style-agnostic approach, and instead focuses on buying quality stocks at cheap valuations. This results in an enhanced riskreturn profile by capturing more upside for low / no extra downside risk.

Our Edge

Experienced team

The team’s portfolio managers have a strong track record of managing EM equities, averaging more than 20 years’ investment experience. The fund has a strong, proven track record.

Structured, repeatable process

Through a consistent process, the team seeks to profit from market inefficiencies and exploit mispricings in value and growth in line with its philosophy.

Frontier inclusion

The team invests up to 10% in frontier markets, favouring the VARPS, which are typically uncorrelated to the broader EM universe and offer investment growth at reasonable entry valuations.

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. 

Investment Team

GAM’s Emerging Markets Equity team is led by Ygal Sebban, with co-manager Rob Mumford. Lynn Xing joined the team as an investment manager in November 2020.

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.

GAM Emerging Markets Equity seeks consistent alpha with strong risk-adjusted returns through a diversified portfolio of long only emerging markets stocks, including frontier plays.
Ygal Sebban, Investment Director
Ygal Sebban
Investment Director
Rob Mumford
Investment Manager
Lynn Xing
Investment Manager

Philosophy and 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. It believes 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. Fundamental bottom-up valuation screens highlight the most undervalued and overvalued stocks across the universe, while top-down models analyse macro influences. 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

Bottom-up valuation regression screening

  • Identify most overvalued and undervalued stocks
  • ESG criteria integrated
2

Top-down analysis

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

Reasons to Invest

Secular and cyclical drivers

Emerging markets 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.

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.

Our Thinking

Fund Information

Contact Us

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Contacts

Please visit our Contacts and Locations page.

Disclaimer: Past performance is not an indicator of future performance and current or future trends. The indications could be based on figures denominated in a currency that may be different from the currency of your residence country and therefore the return may increase or decrease as a result of currency fluctuations. 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. Any reference to a security is not a recommendation to buy or sell that security.

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