Emerging Equity Income

Strategy highlights

: High-conviction, fundamentally driven, benchmark-agnostic approach

Long-term themes target future growth in emerging markets

Emphasis on quality and governance, with focus on consistency of dividend payments and lower volatility

Our philosophy and process

: The strategy is conviction-based with no sector constraints, and invests primarily in emerging markets.

A constantly evolving and forward-looking approach seeks to anticipate change, manage risk, and identify opportunities.

The strategy seeks high-quality companies offering attractive and sustainable dividend yields, underpinned by strong cash generation. It employs a valuation screen to help portfolios in their aim to achieve a dividend yield above that of the index.

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

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 a range of global investment themes to capture these

Strategy profile

Objective: To achieve income together with long-term capital growth from investing in emerging-market securities
Performance benchmark: MSCI Emerging Markets Index (NDR)
Typical number of equity holdings: 40 to 60
Yield discipline: Every new holding must have a prospective yield of at least 85% of the yield achieved by the comparative index. Any holding whose prospective yield falls below a 40% discount to the yield achieved by the index will be sold. On account of liquidity, it may not be possible to dispose of an entire holding immediately.
Strategy inception:: October 2012

Key Investor Information Document

Prospectus

: Our Emerging Equity Income 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.

Want to find out more?

Zoe Kan

Portfolio manager, emerging markets and Asia equities team

Alex Khosla

Portfolio manager, Emerging Markets and Asia Equities team

Fei Chen

Investment analyst

Aditya Shah

Portfolio analyst, Emerging Markets and Asia Equities team

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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.

High yield companies risk: Companies with high-dividend rates are at a greater risk of not being able to meet these payments and are more sensitive to interest rate risk.

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.