We seek high-quality, efficient and sustainable companies whose growth is supported by robust, defensible franchises. They typically generate a high return on equity and maintain strong balance sheets. By purchasing them at attractive valuations, we not only gain the potential to secure further upside, but also reduce the risk of capital loss. We also take into account the economic conditions in which companies operate, and favour emerging economies that provide environments supportive of growth.
We invest across the market-cap spectrum and have the flexibility to allocate decisively across regions, concentrating on markets that offer the best opportunities.
We also consider ESG factors as part of our risk analysis, and vet and investigate opportunities or potential threats to company performance. EOS at Federated Hermes, our global stewardship team, engages with key companies and regulators to influence corporate boards, regulators and industry bodies to act in the interests of long-term shareholders. The team votes at the annual-general meetings of our portfolio companies and provides support on ESG issues they are affected by.
Risk is also assessed at the stock, sector and country level through the ESG Dashboard, a proprietary risk-management tool developed by our Global Equities team.