A global emerging markets equity fund that typically has a meaningful exposure to mid/small caps. The team seeks growth opportunities in the region, whilst also paying heed to relative valuations. Within its sector, the fund features in our 'All-Cap, Growth-Biased' category.
The fund's KIID Synthetic Risk and Reward Indicator (SRRI) is 6. This is a regulatory measurement that is, where possible, calculated from the volatility of its weekly performance over a five-year period. A score of 6 means the fund's historic volatility is between 15% and 25%.
A score of 6 is in keeping with that of peer group funds. However, investors should be aware of characteristics that may result in periods of higher-than-average risk, such as the exposure to mid and small caps and the fund’s structural growth bias. Different share classes could have differing SRRI scores.
Based in New York, Basak Yavuz is the lead portfolio manager and deputy co-chief investment officer of Fundamental Equity at Goldman Sachs Asset Management. She works very closely with the extensive emerging markets research teams, who cover Asia ex Japan, Greater China, India and Latin America/EMEA from offices in New York, Sao Paulo, Riyadh, Singapore, Hong Kong and Mumbai. The team also has access to the resources of the broader Fundamental Equity business.
The team believes that global emerging markets offer a long-term growth opportunity that is best captured through a valuation-focused approach. Hence, they seek to invest in sound businesses with strong fundamentals that are trading at substantial discounts to their view of intrinsic values.
The fund is diversified across industries, with positions sized according to upside conviction. The largest weights in the portfolio are typically in companies with the most upside return potential, relative to their contribution to overall portfolio risk. There are soft limits on active positions at the sector and country level of +/-10% and +/-7.5% respectively versus the index. The fund typically has meaningful exposure to mid and small-cap stocks, in the range of 25-40% of the portfolio.
The process is distinctly bottom-up, with the analysts identifying the most compelling investment opportunities within their sectors, taking into account the fundamental characteristics of the company. They look for companies with strong or improving fundamentals, taking into consideration the industry (its growth, competitive intensity and regulatory outlook), the business (its addressable market, market share trends and sustainable advantages), and quality of its management. Meetings with company management on a face-to-face basis are an essential component of their analysis, reinforcing the importance of the team’s local presence across several locations. This local connectivity also helps in the research of less well-covered mid and small caps, as well as off-benchmark stocks.
Before stocks are put forward for discussion, analysts assess a company’s valuation in order to identify those that are trading at a substantial discount to their intrinsic values. To do this, they use a variety of approaches, including discounted cash flow analysis, an assessment of future earnings, sum of parts calculations and a review of valuation relative to industry peers and the market. Thereafter, a company one-pager and sector comparison sheet are completed in preparation for team debate between the analysts and the portfolio managers. The portfolio manager has the final decision-making responsibility for the portfolio, while the analyst retains ongoing responsibility for stock monitoring and financial modelling.
Formal documentation, including the fund prospectus and the KIID, should be sought directly from the asset manager. For ease of reference, a link to the ASSET MANAGER WEBSITE can be found above.
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