M&G Global Emerging Markets
M&G Global Emerging Markets is an unconstrained fund that is driven by bottom-up stock selection. The fund managers look for companies that offer healthy returns on capital, attractive valuations, and strong shareholder alignment. They believe that real cash flow is particularly important in emerging markets, given the unpredictable nature of these economies. The fund is managed with a long-term perspective and typically has low turnover, meaning that stocks are not frequently bought or sold.
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Fund Manager
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Fund Manager
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Michael Bourke is the lead manager of this fund. Before joining M&G in 2015, Michael spent 10 years as an emerging markets equities analyst and portfolio manager for Legg Mason and FPP Asset Management, after having worked at Deutsche Bank in roles related to equity derivatives trading. At M&G, he has worked as a fund manager and co-manager for various emerging markets funds, since 2017. Michael has a BSc in Computer Science and Accounting from the University of Manchester and an MSc in International Banking and Finance from Heriot-Watt University.
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Company Description
Founded in 1931, M&G Investments employs more than 2,000 people worldwide, including 350 investment specialists. The company was formerly owned by Prudential, but de-merged in 2019 to become listed on the London Stock Exchange. It focuses primarily on fixed interest and equities, but also invests in multi-asset and real estate. Many of its fund managers have been with the company for more than 20 years. Managers are given the freedom to implement their own style on funds.
Fund Performance
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Investment process
This fund follows a detailed and disciplined investment process that emphasises stock fundamentals over macroeconomic factors. The team focuses on the core attributes of profitability, valuation, and corporate governance when selecting stocks. They categorise companies into four baskets: external change, internal change, quality, and asset growth. This categorisation helps them build a balanced portfolio, combining companies with different risk and reward profiles.
The fund’s stock selection process starts with quantitative screening of over 5,000 companies to identify those that meet their criteria. This is followed by detailed fundamental research, which includes analysing the business model, cash flows, and management quality of the companies. The fund typically holds a concentrated portfolio of 50 to 80 stocks, with the weight of each stock reflecting the manager’s conviction.
Portfolio turnover is low, with one or two stocks changing monthly. The four main reasons for selling a holding are: the company’s future returns are no longer undervalued; the investment thesis is fulfilled; better opportunities are identified; or there is a deterioration in fundamentals.
Risk
Investing in emerging markets comes with higher volatility compared with developed markets, but the fund’s diversified portfolio and careful stock selection help manage these risks. The fund manager uses a ‘basket’ approach, which combines companies with varying risk/reward profiles to reduce the overall risk. The fund’s bottom-up approach means that stock-specific risks, such as company performance, are more significant than macroeconomic risks. However, the team actively monitors these risks and works to minimise any unintended exposures.
ESG
ESG – Integrated
M&G believes that ESG factors significantly impact long-term investment outcomes and aims to achieve the best risk-adjusted returns for clients by integrating ESG criteria into investment decisions. This approach is applied across all asset classes and sectors, considering ESG factors as essential components of the investment process. The investment teams engage in regular dialogues with company executives to ensure alignment with long-term shareholder interests. M&G’s Stewardship & Sustainability team assists fund managers with ESG issues; coordinates stewardship and responsible investment activities; engages with companies on governance and sustainability matters; manages voting responsibilities at shareholder meetings; and maintains constructive dialogues with company management to uphold long-term shareholder responsibilities.
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