On April 5, 2013, I became Lead Manager of the newly renamed Trimark Emerging Markets Class*. In this post, I will run through what this means for the Fund and what you can expect from the team moving forward. We’re excited to be adding an emerging markets mandate to our product shelf.
The Fund will be managed using the proven Trimark approach. My colleague Virginia Au is co-manager on the Fund, and we are supported by Matt Peden and Danilo Martins.
Changes to Trimark Emerging Markets Class
We got to work quickly, so you can expect to see:
- Approximately 85% turnover in the Fund right away. We planned to deploy between 70% and 75% of the turnover proceeds within a month and these changes are in process as I write.
Going forward, you can expect the Fund to:
- Hold between 50 and 70 companies
- Typically hold companies from eight to 15 different countries
As far as currency hedging goes:
- We will consider hedging exposure to a foreign currency in situations where we feel strongly that its long-term fundamentals are weakening and will eventually depreciate against the Canadian dollar
- In the long run, we believe that all assets – whether equities or currencies – are driven by fundamentals
- These decisions will be made on a case-by-case basis
Changes to the investment approach
There are two key differences between the approach of the former manager of the Fund – Invesco Global Equity Team –and the Trimark discipline that we’ll employ going forward.
Narrowing the investment universe
- The Invesco team uses a formal screening process based on valuation measures
- At Trimark, we narrow the investment universe through company visits, attending industry conferences, reading industry research and leveraging the expertise of the overall Trimark team
- Screening will be used, but to a lesser extent and frequency. We believe that if we narrow the investment universe using only valuation screens, we may miss quality companies that don’t meet the quantitative measures applied
- The Invesco team uses a six-member Emerging Markets Investment Committee to review current and potential portfolio holdings weekly
- The Trimark approach does not include investment committees. Instead, each team member generates investment ideas and debates with the team regularly
- As Lead Manager, I’ll ultimately pull the trigger on portfolio changes
- Virginia, as co-manager, together with the team, will be my sounding board, challenging me at every step
The quality of a business is always first and foremost in our process. If we identify a quality company, but it’s trading at a price that doesn’t provide a sufficient margin of safety, we will monitor the business and wait for an opportunity to invest at an attractive price.
Specifically, we’re looking for endurable competitive advantage, high returns on invested capital, strong free cash flow, good prospects for long-term growth and top-notch management teams.
We will sell companies in the following situations:
- The company’s share price has exceeded our estimate of its intrinsic value
- Better opportunities, in terms of valuation and growth prospects, have arisen elsewhere
- The team’s initial judgment about the fundamentals of the business has proven incorrect
I started my career in the investment industry in Hong Kong and China before joining a Canadian firm as a senior member of an Europe, Australasia and Far East (EAFE) equities team.
I joined Trimark in 2009 and am currently:
- Lead Manager of Trimark International Companies Fund/Class, an EAFE mandate with an emerging markets component
- One of three co-leads on Trimark Global Fundamental Equity Fund/Class, a core global equity mandate
- A co-manager of Trimark Global Dividend Class and Trimark Fund, covering the Asia-Pacific and Latin America element for both
Virginia joined Trimark in 2006 as an investment analyst and became a Portfolio Manager in 2009. She is currently:
- Co-manager of three small-cap mandates: Trimark Canadian Small Companies Fund, Trimark U.S. Small Companies Class and Trimark Global Small Companies Class
As Co-manager of Trimark Emerging Markets Class, Virginia is focused on smaller companies with a capitalization of less than US$3 billion.
She recently spent five months in Asia, visiting more than 70 companies in eight countries to establish local contacts and strengthen her on-the-ground experience. I am really looking forward to thorough and well-rounded debates and discussing the business ideas she generates. Virginia will allocate about one-third to a quarter of her time to Trimark Emerging Markets Class.
Matt Peden has been working on European equities (including eastern Europe) for over two years, and has contributed to the strong performance of Trimark Europlus Fund. Danilo Martins, a native Brazilian with an MBA from Queens University, recently joined us from Macquarie Capital Markets. Danilo is dedicated to emerging markets company research.
Please feel free to use the comment field below to ask any questions about Trimark Emerging Markets Class. If you’re looking for more detailed info about the change, please feel free to contact your advisor, your Invesco sales rep or our Client Relations team.
Learn more about the Trimark Investments team.
*On April 5, 2013 Invesco Emerging Markets Class was renamed Trimark Emerging Markets Class. The Fund’s portfolio management and investment strategies were changed. The performance of this Fund for the period prior to April 5, 2013 would have been different had the current investment strategies been in effect during that period.