Martin Currie has revealed further details of its Latin America fund, which is scheduled for launch next month.
Jeff Casson, who joined the group from Scottish Widows Investment Partnership (Swip) earlier this year, will run the portfolio.
He says he will consider non-index stocks but benchmarks the fund against the MSCI Latin America 10/40 index, which irons out the market’s disproportionate weighting in Vale and Petrobras, two Brazilian companies. (article continues below)
Casson aims to explore themes and ideas in Latin America. He will adopt a multi-cap approach and typically hold 35-55 stocks, which will be unconstrained best ideas. The investment focus will be on Argentina, Brazil, Chile, Columbia, Mexico and Peru.
Casson’s investment philosophy and approach is based on five-year historical analysis and five-year forward projection.
Casson describes himself as a bottom-up manager who aims to reduce top-down risk, rather than using macro factors as a source of outperformance. When selecting holdings for the portfolio, Casson and his team will consider factors such as the price-earnings ratio, return on capital, earnings per share, growth and cash yield.
The investment philosophy and approach is based on a primary belief that share prices reflect a long-term cash flow generation.
According to Casson the quantitative process contains long-term modelling, examination of company state- ments and analysis of cash flow and return on capital.
Company visits are a vital part of their research and the team plans always to meet the company management before investing in a stock. In addition, Casson will integrate sustainability criteria into his analysis.
Although Casson has been named primary manager of the fund, the global emerging market team, headed by former Swip colleague Kim Catechis, is tied into the management process.
For example, the team regularly reviews all investment cases and only incldes in the portfolio stocks that the team agrees on unanimously.
The size of each stock is determined by the expected upside to target price and the availability of competing ideas. New positions will typically account for about 1-2% of the fund.