Benchmark

MSCI China (r)

Objective

The China Equity Opportunity strategy is a pure equity portfolio, built with a distinctive investment philosophy that focuses on intrinsic value. Our goal is to provide access to the Chinese equity market in a sustainable and risk-controlled manner. The strategy invests for the long term.

Investment philosophy and process

We combine the secular growth story with a relentless focus on value. Each analyst focuses on specific sector(s) and identifies stocks with a significant discount to their intrinsic values, winnowing down the investment universe in several steps. Portfolio candidates are debated and discussed between analysts and portfolio manager through a peer review process. This results in a tightly controlled yet diversified portfolio of 40 to 70 high-conviction plays, opening up a source of true alpha for investors in China. Risk is integral to the process and all portfolios are monitored to avoid uncompensated risks.

Benchmark

J.P. Morgan Corporate Emerging Markets Bond Index Diversified

Objective

Seeks to outperform the benchmark by investing in emerging markets corporate bonds denominated in USD, and may also invest in emerging markets sovereign and/or quasi-sovereign bonds should corporate bond risk premiums over sovereign bonds be deemed unattractive.

Investment philosophy

We employ top-down macroeconomic and bottom-up credit research to develop investment themes and select appropriate securities.

Investment process

By balancing top-down and bottom-up analysis, the investment process brings together extensive experience as well as a diversity of thought and opinion from the fixed income investment committee, the emerging markets debt strategy team, and the credit research team - supported by quantitative tools and models.

1. Top down analysis focuses on the global macro framework. It explores global macroeconomic trends, examines macroeconomic factors, and scrutinizes the macroeconomic risk framework.
2. Bottom-up analysis focuses on countries and sectors, considering economic, political and social factors.
3. Based on the combined results, the overall allocations and risk budget are defined for the strategy, which is then implemented in specific portfolios with individual exposures to regions, countries, sectors, spreads, and currencies.
4. Each portfolio is subject to continuous monitoring of positions and risks.

Benchmark

J.P. Morgan Emerging Markets Bond Index Global (EMBIG)

Objective

Outperform benchmark by investing in a wide range of emerging market fixed income securities issued by sovereign, agency and corporate borrowers.

Investment philosophy

1. Discrepancies sometimes occur between securities' market prices and their fundamental values.
2. In the case of emerging markets debt, price volatility can exceed that of underlying macroeconomic fundamentals.
3. We seek to take advantage of these discrepancies by using a disciplined approach to estimate fundamental value.

Investment process

1. Credit selection - In our price/value framework we search for bonds with the potential to deliver strong performance, given the firm's country and market views.
2. Risk management - During portfolio construction we evaluate potential trades within a risk management framework, which compares our portfolio to its benchmark.
3. Feedback - Detailed analysis allows us to measure the impact of every country and security decision made.

Benchmark

Custom EME Benchmark

Objective

The Emerging Markets Equity strategy seeks to outperform the custom EME benchmark by 500 basis points (gross of fees) on an annualized basis, with active risk of up to 12 percent over a full market cycle, typically three to five years.

Investment philosophy and process

The Emerging Markets Equity strategy follows a price to intrinsic value approach. Internally generated research, focused on longer term value drivers at the industry, stock and country level, is used to estimate fundamental value for stocks, upon which investment decisions are made. The price to intrinsic value investment philosophy means we pay great attention to investment fundamentals and expected cash flows when assessing investments (a bottom-up approach). The process begins with in-depth research conducted by analysts who are sector specialists. Our objective is to develop unique insights that enable us to have a clearly differentiated investment thesis against the consensus in the market. An important part of this is our ability to seek out unconventional sources of information. The analysts present their analysis and conclusions to the Portfolio Managers, who rigorously review and challenge the views. It is the role of portfolio manager at the portfolio construction stage to take the best ideas of the analysts and construct a portfolio to best meet the client objectives. Risk is integral to the process and all portfolios are monitored to ensure we are not taking uncompensated risks.

Benchmark

MSCI Emerging Markets (net) (in USD)

Objective

The Emerging Markets Equity HALO strategy seeks to outperform the MSCI Emerging Markets benchmark by 500 basis points (gross of fees) on an annualized basis, with active risk of up to 12 percent over a full market cycle, typically three to five years.

Investment philosophy and process

We believe that a high-conviction portfolio, which exploits the inefficiencies uncovered through a long-term price to intrinsic value methodology, provides the opportunity to maximize alpha. Our estimate of intrinsic value is determined by the fundamentals that drive a company’s future cash flow. Our focus is on valuations and quality (industry structure, profitability and corporate governance) as we invest for the long-term benefit of our clients.

Our process begins with research conducted by the analysts, based on our investment philosophy. Our objective is to develop unique insights that enable us to have a clearly differentiated investment thesis against the consensus in the market. An important part of this is our ability to seek out unconventional sources of information. Not only do we talk to the companies we invest in directly, we also engage with suppliers, competitors and other industry experts. This deeper research and a longer investment horizon can uncover more opportunities to add value for our clients. Risk is integral to the process and all portfolios are monitored to avoid uncompensated risk.

It is the role of the lead portfolio manager, Urs Antonioli, to take the best ideas of the analysts and construct a portfolio that best meets the client objectives. Final portfolio decisions are made by the Portfolio Construction Committee, chaired by Geoffrey Wong. For each proposed stock the associated analyst is directly involved in the decision-making process and held accountable for its success in the portfolio.

Benchmark

UBS Greater China Index (comb)

Objective

The Greater China Equity strategy is a pure equity portfolio built with a distinctive investment philosophy that focuses on intrinsic value. Our goal is to provide access to the Chinese equity market in a sustainable and risk-controlled manner. The strategy invests for the long term, with a focus in Hong Kong, Taiwan and offshore-listed China equities.

Investment philosophy and process

With the Greater China Equity strategy, we combine the secular growth story with a relentless focus on value. Each analyst focuses on specific sector(s) and identifies stocks with a significant discount to their intrinsic values, winnowing down the investment universe in several steps. Portfolio candidates are debated and discussed between analysts and portfolio manager through a peer review process. This results in a tightly controlled yet diversified portfolio of 60 to 100 high-conviction plays, opening up a source of true alpha for investors in Greater China. Risk is integral to the process and all portfolios are monitored to avoid uncompensated risks.