Concentrated Global Emerging Markets

Strategy highlights

: Stock selection driven by bottom-up proprietary research which incorporates consideration of environmental, social and governance (ESG) risks, issues and opportunities

Long-term thematic research targets future profitability rather than historic profitability

Focus on ‘compounders’ aims to limit downside risk when markets become less certain

Our philosophy and process

The strategy seeks to invest in companies that are well governed and run for the benefit of all shareholders. It can also invest a proportion of assets in developed-market companies where business is driven by emerging-market operations.

Material ESG risks, opportunities and issues are considered as part of the investment research process.

The strategy has a long-term investment horizon. It focuses on balance-sheet strength and return-on-capital metrics.

Every time we consider a security or look at an industry or country, it’s in the context of what’s happening across the world. We believe the investment landscape is shaped over the long term by some key trends, and we use themes to help identify opportunities.

Investment team

Our Concentrated Global Emerging Markets strategy is managed by an experienced team. In-house research analysts are at the core of our investment process, and our multidimensional research platform spans fundamental, thematic, ESG, quantitative, geopolitical, investigative and private-market research to promote better-informed investment decisions.

14: years’ average investment experience
5: years’ average time at Newton

Paul Birchenough

Co-head emerging markets and Asia equities team
Ian Smith

Co-lead, Emerging Markets and Asia Equities team
Alex Khosla

Portfolio manager, Emerging Markets and Asia Equities team
Zoe Kan

Portfolio manager, emerging markets and Asia equities team
Fei Chen

Investment analyst
Aditya Shah

Portfolio analyst, Emerging Markets and Asia Equities team

Strategy profile

Objective: The strategy seeks to outperform the MSCI Emerging Markets (NDR) Index by more than 3% per annum over rolling 5-year periods, by achieving long-term capital growth from a portfolio comprised predominantly of emerging-market securities.
Performance benchmark: MSCI Emerging Market Index (NDR)
Typical number of equity holdings:: 40 to 70
Strategy size:: A$2.5bn (as at 30 June 2023)
Strategy inception:: May 2011
: The Newton Concentrated Global Emerging Markets strategy changed its name from Newton Global Emerging Markets strategy on 1 January 2023.

Your capital may be at risk. The value of investments and the income from them can fall as well as rise and investors may not get back the original amount invested.

Newton will make investment decisions that are not based solely on ESG considerations. Those considerations are among many inputs into the fundamental analysis. Other attributes of an investment may outweigh ESG considerations when making investment decisions. The way that material ESG considerations are assessed may vary depending on the asset class and strategy involved. As of September 2022, the research team performs ESG analysis on equity securities prior to their addition to Newton’s Research Recommended List (RRL). ESG reviews are not performed for all fixed income securities. The portfolio managers may purchase equity securities that are not included on the RRL and which do not have ESG reviews. Not all securities held by Newton’s strategies have an ESG review completed prior to investment.

Key investment risks

: Objective/performance risk: There is no guarantee that the strategy will achieve its objectives.

Currency risk: This strategy invests in international markets which means it is exposed to changes in currency rates which could affect the value of the strategy.

Geographic concentration risk: The strategy primarily invests in a single market which may have a significant impact on the value of the strategy.

Derivatives risk: Derivatives are highly sensitive to changes in the value of the asset from which their value is derived. A small movement in the value of the underlying asset can cause a large movement in the value of the derivative. This can increase the sizes of losses and gains, causing the value of your investment to fluctuate. When using derivatives, the Strategy can lose significantly more than the amount it has invested in derivatives.

Emerging markets risk: Emerging Markets have additional risks due to less-developed market practices.

Concentration risk: A fall in the value of a single investment may have a significant impact on the value of the strategy because it typically invests in a limited number of investments.

Shanghai-Hong Kong Stock Connect and/or the Shenzhen-Hong Kong Stock Connect (‘Stock Connect’) risk: The strategy may invest in China A shares through Stock Connect programmes. These may be subject to regulatory changes and quota limitations. An operational constraint such as a suspension in trading could negatively affect the strategy’s ability to achieve its investment objective.

Counterparty risk: The insolvency of any institutions providing services such as custody of assets or acting as a counterparty to derivatives or other contractual arrangements, may expose the strategy to financial loss.