Global Emerging Markets ex-China Equity

A sub-fund of the Federated Hermes Global Emerging Markets Equities strategy investing across emerging markets except for China.

Reasons to invest

Truly active management

A concentrated portfolio with a high active share, invested with a long-term perspective.

Multi-cap

Investing across the market-cap spectrum.

From top to bottom

A top-down framework to identify countries with conditions supportive of growth. And bottom-up analysis to discover quality companies trading at attractive valuations.
ASIA EX-JAPAN EQUITY[Icon] ESG integration: We incorporate ESG and engagement into our investment process, drawing on the resources of EOS at Federated Hermes, our leading stewardship team. [Icon]Track record: The Strategy ranks among the best performing Asian equity funds since inception, but has a significantly differ-ent composition to its peers[1]. GLOBAL EMERGING MARKETS SMID[ICON] Long-term track record: The Strategy builds on the award-winning success of our Global Emerging Markets Strategy, which the team has managed since 2008.[ICON] Responsible owner: We invest in companies as an active owner and partner. This means we maintain a regular dialogue and encourage strong environmental, social and governance (ESG) practices. GLOBAL EMERGING MARKETS [ICON] Responsible owner: Investing in companies throughout cycles as an active owner and partner, we maintain a regular dialogue and encourage strong environmental, social and governance (ESG) practices.[ICON] Quality and safety: Buying quality companies at a discount can provide a margin of safety in a volatile asset class. GLOBAL EQUITY[ICON] ESG integration: Companies with a good or improving ESG track record are favoured. Our leading stewardship team, EOS, provides best-of-breed engagement insights.[ICON] Risk management: Proprietary risk management tools enable the team to monitor and neutralise macroeconomic risks before they impact returns. GLOBAL EQUITY LOW CARBON[ICON] ESG supports long-term returns: Companies managing their ESG risk have historically outperformed, while those that are improving can generate greater shareholder value in the future.¹[ICON] Risk management: Proprietary risk management tools enable the team to monitor and neutralise macroeconomic risks before they impact returns. GLOBAL SMALL CAP [ICON] Responsible owner: We are an active owner and partner. In practice, this means we maintain a regular dialogue with the companies we own and encourage strong ESG practices.[ICON] Extensive experience in the asset class: The international business of Federated Hermes has managed regional small cap strategies since 1987. SDG Engagement High Yield Credit· [ICON] Investment strength: Since 2004, we have delivered attractive high yield credit returns through relative-value investing across the capital structures of companies worldwide.· [ICON] Engagement depth: Our dedicated engagers are supported by EOS at Federated Hermes, a leading global steward-ship team, and the pioneering Responsibility Office. Unconstrained Credit [ICON] Experienced team: A skilled, integrated team with a strong record of implementing relative-value credit strategies since 2004.[ICON] ESG integration: Our investment process incorporates Federated Hermes’ leading ESG integration and engagement insights. US SMID [ICON] Responsible owner: We are an active owner and partner. In practice, this means we maintain a regular dialogue with the companies we own and encourage strong ESG practices.[ICON] Extensive experience in the asset class: The international business of Federated Hermes has managed regional small-cap strategies since 1987.

Responsible owner

Investing in companies throughout cycles as an active owner and partner, we maintain a regular dialogue and encourage strong environmental, social and governance (ESG) practices.

Quality and safety

Buying quality companies at a discount can provide a margin of safety in a volatile asset class.

Risk mitigation

Emerging markets are volatile, and the team considers macro factors in the asset allocation, thereby avoiding complex parts of the asset class. The team weighs up the outlook for emerging market inflation, competitiveness, and currencies, allowing it to mitigate risks in emerging market investing to the best extent possible.

Emerging markets ex-China offers exposure to consumption, resource and technology themes

More than half of the world’s population lives in emerging markets ex-China representing about one fifth of global GDP. Beyond China, most emerging markets benefit from positive demographics, an expanding middle class, developing digital sectors and significant opportunities in infrastructure. 

In addition to the secular drivers of consumption and technology, emerging economies ex-China control huge reserves of key commodities, such as green metals, that are vital for the transition to net zero. While macro challenges remain in a few areas, overall vulnerabilities are limited, and ongoing reforms are likely to strengthen the case for emerging markets ex-China in years to come.

GEMs ex-China aims to mitigate any geopolitical and ESG risks related to China while benefiting from the vast growth potential across emerging markets.

Kunjal Gala
Lead Portfolio Manager, Emerging Markets

Why GEMs ex-China Equity?

Die Schwellenländer befinden sich in einem raschen Wandel: Die städtische Entwicklung und die technologischen Revolutionen sorgen für höhere Lebensstandards und eine wachsende Mittelschicht. Trends wie Digitalisierung, Elektrifizierung, Biotechnologie und Cyber-Sicherheit bieten spannende Möglichkeiten, um die Gewinner dieses Strukturwandels auszumachen.

Anleger in lokalen Schwellenmärkten haben in der Regel einen Zeithorizont von sechs bis 12 Monaten und orientieren sich daher stärker an Nachrichten, Quartalsergebnissen und kurzfristigen Katalysatoren. Infolgedessen können Unternehmen aufgrund vorübergehender Probleme falsch bewertet sein. Dies kann Chancen für Anleger eröffnen, die einen langfristigen Fokus aufbringen können. Wir sind genau wie die Unternehmensleitungen langfristig orientiert.

Wir versuchen, von der kurzfristigen Schwäche qualitativ hochwertiger Unternehmen oder von Fehlbewertungen bei durchschnittlichen Unternehmen zu profitieren. Obwohl das Portfolio heute in qualitativ hochwertigen Aktien mit Schwerpunkt auf Wachstum positioniert ist, sind wir weder auf Wachstum noch auf Substanz ausgerichtet. Das bedeutet, dass wir die Flexibilität haben, dort zu investieren, wo sich unseres Erachtens die besten Gelegenheiten bieten.

How we invest

Fundamental approach
Seeking discounts to intrinsic value
ESG integration

Investment philosophy

We believe:

  • Structural changes in the world economy are transforming emerging markets.
  • The winners that emerge from this transformation will be efficient and sustainable businesses.
  • This is a long-term trend requiring a long-term approach.
  • Quality companies trading at attractive valuations, in countries with conditions supportive of growth, provide the best investment opportunities.
  • Investing in lower-quality, significantly mispriced companies can be a catalyst for the realisation of value.
  • The best way to add value for investors is through a process that integrates top-down analysis with bottom-up fundamental stock selection, augmented by ESG analysis and engagement.

Investment process

Bei der Ideenfindung ziehen wir eine Vielzahl von Quellen heran, darunter Treffen mit der Unternehmensleitung, unser globales Kontaktnetzwerk, Brokerresearch, Branchenanalysen und quantitative Screenings.

Anhand eines proprietären quantitativen Modells werden Unternehmen nach den Faktoren Bewertung, Qualität und Momentum bewertet. Im Rahmen dieses Screenings erhalten Qualitätsunternehmen mit stabiler Aktionärsbasis und einem starken Managementteam gute Bewertungen (Scores). Wir identifizieren ca. 200 Unternehmen, die auf unsere Watchlist kommen.

Wir achten besonders auf die folgenden Anlagekriterien:

Qualität
Substanz mit Katalysatoren
Sicherheitsmarge
Strukturelle Treiber
Vermeidung von nicht nachhaltigen Sparten
Bewährte Geschäftsmodelle
Moats (wirtschaftliche Wallgräben)/wehrhaftes Geschäft
Strukturelle Treiber
Starke Bilanz
Hohe Eigenkapitalrendite
Moats (wirtschaftliche Wallgräben)/wehrhaftes Geschäft
Gute Governance
Beständige und sich verbessernde Umsätze und Gewinne
Hoher Abschlag gegenüber dem inneren Wert
Angemessenes KGV mit starker oder sich verbessernder Eigenkapitalrendite
Verbesserung von Umsatz, Margen und Cashflow-Generierung
Niedrige Kurs-Gewinn-Wachstums-Verhältnisse
Stabile/sich verbessernde Regulierung
Ein sich verbessernder Zyklus oder zumindest der Tiefpunkt eines Zyklus

We seek to establish a company’s financial health and long-term prospects. We model financial forecasts (one- and five-year earnings), cash flow and balance sheet. We combine this with the analysis of operational, financial and ESG risk factors to estimate the intrinsic value of the company.

We believe concentrated portfolios are best equipped to maximise risk-adjusted returns. Typically, we hold 40-60 companies in a portfolio, with the top 20 holdings accounting for more than 60% of the portfolio.

Aktiv investiert in Asien und Schwellenländer

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Team

5980, 6093, 5943

Chris Clube

Co-Portfolio Manager, Federated Hermes Global Emerging Markets Equity Fund and Senior Analyst, Federated Hermes Limited

Vivek Bhutoria

Vivek Bhutoria, CFA

Co-Portfolio Manager – Federated Hermes Global Emerging Markets Equity Fund and Senior Analyst, Asia ex-Japan, Federated Hermes Limited

Kunjal Gala

Head of Global Emerging Markets, Lead Portfolio Manager, Federated Hermes Limited

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