ESG in emerging markets has room to mature
Our research leads us to believe that leaders tend to remain leaders, also in terms of share-price performance.
We focus on leading companies with high growth potential due to reinvestments made possible by high returns on invested capital (ROIC) and strong competitive positions. Market participants are often slow to acknowledge high ROICs, which we consider an important share price driver. This failure on the part of the market creates opportunities for high conviction, active stock pickers like us.
To be included in our portfolios, a company needs to be in the first quartile in terms of ROIC and industry position, trade at a discount to its intrinsic value, and fulfill our minimum ESG standards. These four factors form the cornerstones of our “matrix”, or mtx, approach.
As fundamental equity managers, we use a combination of systematic screens and fundamental analysis before making an investment decision. We use a proprietary ESG scoring model to investigate each company in depth and understand the risks associated with their business model.
This ensures style-consistent investment results and potential outperformance through the market cycle.
The entry point significantly determines the investment’s rate of return in the medium-term.
This view is supported by latest academic research and our own performance data.
Our two portfolio managers, Roger Merz and Thomas Schaffner, are supported by a dedicated Zurich-based team of 18 investment professionals.