Emerging Markets Equity

Background:

The Global Emerging Markets Equity Programme commenced in October 2009. It is a long only strategy that offers equity exposure to companies in developing and frontier markets. The lead portfolio manager for global emerging markets equity is Edward Baker. Prior to joining The Cambridge Strategy in 2007, Ed was CIO of emerging markets equities at AllianceBernstein where he had responsibility for the $10 billion EM equity product and supervised a team of 21 analysts. The investment team is organized regionally with an experienced portfolio manager responsible for each of Asia, EMEA and LATAM.

Investment Approach:

We believe that investment opportunities are driven by key top-down factors which play a dominant role in earnings potential, investor sentiment and in setting stock price multiples. Hence our investment process places a heavy emphasis on the evaluation of the global top-down framework. We seek to identify the key macroeconomic and structural themes that we think are changing and that will impact markets going forward. The determination of consensus views is an important ingredient of our assessments. We particularly seek top-down themes that we think are misunderstood or ripe for change in ways not anticipated by others. Our evaluation of the top-down themes includes an assessment of the evolution of the economic and risk framework in the world’s developed markets with an emphasis on how this framework will influence the emerging markets. Regional, country and sector themes in the emerging markets are then systematically reviewed in this broader framework.

We seek to emphasis those regions, sectors and countries that will be most strongly influenced by the top-down themes we have identified. However, valuation assessments play a key role in determining our allocations. Everything else equal we will emphasis those countries and sectors with the most attractive valuations.

Currency exposures are a related source of portfolio risk and reward and are explicitly managed. Although our bias is to be long emerging market currencies, there are times when the signals from our proprietary currency models motivate us to hedge our exposures.

Long-term investment success requires integrated risk management applied at every level of the investment process. Portfolio tracking error is explicitly managed and kept below 8%. Liquidity is monitored and we avoid holdings that cannot be liquidated over a reasonable time frame. We invest in non-benchmark stocks, including frontier markets. These holding will generally be smaller and maintained only when we believe they offer exceptional upside potential. The portfolio is limited to a total of 20% in the frontier markets.


Programme Description:

Description:                       
Long Only – Emerging Markets Equities – Global
Investment Style:
Active Equities– Top Down/ Active Currency Management
Target Returns:
MSCI Emerging Markets Index plus 3% per annum (rolling 3 year periods)
Benchmark:
MSCI Daily TR Net Emerging Markets Index (USD)
Target Tracking Error:
4% - 8% per annum
 
 
   
Investment Universe:  
Selection Universe: Broad market(subject to liquidity limits)
Regions: LATAM/ Asia /EMEA
Markets: MSCI Emerging Markets Index plus frontier emerging markets
Instruments: Equity instruments/Derivatives (inc. FX)/ETF/Indices or basket exposure
   
Structural Details:  
Vehicles: Pooled Fund/Managed Account
Liquidity: Monthly
Minimum Investment: Pooled Fund US$ 250,000/Managed Account $10,000,000 (or equivalent)
Investment Manager: The Cambridge Strategy (Asset Management) Limited
Management Fee: Up to US$ 50 million: 1.0%p.a
  US$ 50 - US$ 100 million: 0.90%p.a
  US$ 100 - US$ 200 million: 0.80%p.a
  Over US$ 200 million: 0.75%p.a

Awards

Winner: 2013 Best Sub $100m Hedge Fund, Hedge Funds Review’s European Single Manager Awards
The Cambridge Strategy Apollo Emerging Macro Programme
Winner: 2013 Best Global Macro Fund Manager, Hedgeweek Global Awards
The Cambridge Strategy Apollo Emerging Macro Programme
Winner: 2012 Best F/X Hedge Fund, Hedge Fund Review
The Cambridge Strategy Asian Markets Alpha Programme
> Winner: 2010 Best F/X Hedge Fund, Hedge Fund Review
The Cambridge Strategy Emerging Markets Alpha Programme
> Nominated: 2010 Currency Manager of the Year, European Pension Magazine Awards
> Nominated: 2010 Currency Manager of the Year, Global Pensions Awards
> Winner: 2009 Best F/X Hedge Fund, Hedge Fund Review
The Cambridge Strategy Asian Markets Alpha Programme
> Nominated: 2007 Currency Manager of the Year, Professional Pensions.
> Nominated: 2007 Currency Manager of the Year, Specialist & Alternative Investment Manager Awards.
The Cambridge Strategy