mtx China A-Shares Leaders Strategy

Conviction Equities

Why invest?

  • We think a combination of systematic screens (“matrix”) and fundamental research can help provide style-consistent investment results and potential outperformance through the market cycle.
  • A strong focus on valuation at the entry point can significantly determine the strategy’s rate of return in the medium-term.
  • ESG integration helps improve risk management and enhances performance

"We believe there are attractively valued and profitable industry leaders in emerging markets, including China, that know how to use their cash. Systematic screening helps find them."

Roger Merz, Head of mtx Portfolio Management

Our investment process

There are some 700 stocks in the opportunity set but only about 500 pass a first filter that looks for high returns on invested capital (ROIC).

We subsequently examine the companies’ industry position, valuation and ESG metrics, which shrinks the number further to around 250 names, and, at a later stage, to around 100-150 candidates that could be included over the course of a year.

However, only a few eventually make it into our concentrated portfolio of 30 to 50 stocks.

Investment opportunity – leaders tend to stay leaders

Dynamic growth rates in China have produced many profitable businesses.

Market participants are often slow to fully acknowledge high ROICs, which we consider an important share price driver. This failure on the part of the market creates opportunities for stock pickers like us.

We use systematic screening as well as fundamental research to pursue portfolio candidates with:

  • above-average quality in terms of ROIC, industry positioning and ESG
  • above-average growth
  • below-average valuation

We believe profitable companies with strong industry positions are able to invest into future growth – and their stocks often reflect this. Moreover, such leaders tend to stay leaders.

Investment philosophy – the leader takes it all

The investment philosophy is based on the belief that selecting the right companies help driveperformance over the long term. We are bottom-up stock pickers and use a rigorous investment framework to seek to identify attractively valued industry leaders. We believe those companies can offer consistently high returns on invested capital, a strong industry position and effectively address ESG issues.

Investment team

Two experienced portfolio managers, Roger Merz and Thomas Schaffner, are responsible for our entire mtx offering. Being true ambassadors for their cause, they invest their own money in the strategies they manage.

They are supported by a team of 15 seasoned experts. These include professionals doing fundamental research as well as quantitative and ESG analyses.

The team constantly monitors the risk metrics not only of the companies, but also of aspects related to business cycles and portfolio characteristics.

mtx China A-Shares Leaders Composite

In USD as of 12.31.2023

Trailing Returns

 

 

 

Calendar Year Returns

 

 

 

The composite inception date is 1 Jun 2021. The composite‘s gross rates of return are presented before the deduction of investment management fees, other investment-related fees, and after the deduction of foreign withholding taxes, brokerage commissions and transaction costs. An investor’s actual return will be reduced by investment advisory fees. The composite‘s net rates of return are presented after the deduction of investment management fees, brokerage commissions, transaction costs, other investment-related fees and foreign withholding taxes. Results portrayed reflect the reinvestment of dividends and other earnings. The comparison to an index is provided for informational purposes only and should not be used as the basis for making an investment. There may be significant differences between the composite and the index, including but not limited to the risk profile, liquidity, volatility and asset composition. The MSCI China A Onshore Index captures large and mid cap representation across China securities listed on the Shanghai and Shenzhen exchanges. Past performance not an indication of future results. Returns more than one year are annualized. Please refer to the Disclaimer tab for additional explanations regarding composite disclosure and other Important Information.

Composite Disclaimer

Composite description

The mtx China A-Shares Leaders Composite includes all share classes of pooled funds and all segregated accounts invested via Shanghai- and/or Shenzhen-Hong Kong Stock Connect in stocks which either qualify as China A-Shares or are linked to China A-Shares. The strategy invests in companies which are leaders in their sector in terms of profitability, competitive position as well as attractive valuation according to our assessment. The high-conviction, concentrated portfolios within this strategy are managed benchmark- agnostically and constructed on the basis of pure bottom-up stock selection.

Benchmark description

MSCI China A Onshore Net Total Return Index (since inception).

Firm definition

Vontobel Asset Management is a multi-boutique asset management firm established in 1988 and regulated by the Swiss Financial Market Supervisory Authority FINMA. For GIPS purposes, Vontobel Asset Management is defined to include assets managed in the Fixed Income, the Sustainable Equities, the Vescore and the Vontobel Multi Asset boutiques across all global offices and includes both the management of institutional segregated accounts and pooled funds.

Claim of compliance 

Vontobel Asset Management claims compliance with the Global Investment Performance Standards (GIPS®).

List of composites and how to obtain a GIPS Report

To receive additional information regarding Vontobel Asset Management, including a GIPS Composite Report for the strategy presented in this advertisement and a list of all composite descriptions managed by the firm, contact the GIPS Office at gips@vontobel.com or write Vontobel Asset Management AG, GIPS Office (G27 611), Gotthardstrasse 43, 8022 Zurich, Switzerland.

CFA Institute

GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein.

Important Information

This document has been prepared and approved by a company of the Vontobel Group (“Vontobel”) for informational purposes only and does not constitute an offer, solicitation or recommendation to buy or sell any investment securities or strategies discussed, to effect any transactions or to conclude any legal act of any kind whatsoever. This information should not be considered investment advice or any other kind of advice on legal, tax, financial or other advice or a recommendation to purchase, hold or sell any investment. No representation is given that the securities, products, or services discussed herein are suitable for any particular investor.

The index comparisons are provided for informational purposes only and should not be used as the basis for making an investment decision. Further, the performance of the composite and the Index may not be comparable. There are significant differences between the composite and the indices referenced, including, but not limited to, risk profile, liquidity, volatility and asset composition. Please note that an investor cannot invest directly in an index.

Environmental, social and governance (“ESG”) investing and criteria employed may be subjective in nature. The considerations assessed as part of ESG processes may vary across types of investments and issuers and not every factor may be identified or considered for all investments. Information used to evaluate ESG components may vary across providers and issuers as ESG is not a uniformly defined characteristic. ESG investing may forego market opportunities available to strategies which do not utilize such criteria. There is no guarantee the criteria and techniques employed will be successful. Unless otherwise stated within the strategy's investment objective, information herein does not imply that the Vontobel strategy has an ESG-aligned investment objective, but rather describes how ESG criteria and factors are considered as part of the overall investment process.

Any projections contained above are based on a variety of estimates and assumptions. There can be no assurance that the assumptions made in connection with the projections will prove accurate, and actual results may differ materially. The inclusion of projections should not be regarded as an indication that Vontobel considers the projections to be a reliable prediction of future events and projections should not be relied upon as such.

There can be no assurance that investment objectives will be achieved. Clients must be prepared to bear risk of a total loss of their investment.

Past performance is not a reliable indicator of current or future performance. The return may go down as well as up, e.g. due to changes in rates of exchange between currencies. The value of invested monies can increase or decrease and there is no guarantee that all or part of your invested capital can be redeemed.

The MSCI data is for internal use only and may not be redistributed or used in connection with creating or offering any securities, financial products or indices. Neither MSCI nor any other third party involved in or related to compiling, computing or creating the MSCI data (the “MSCI Parties”) makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and the MSCI Parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to such data. Without limiting any of the foregoing, in no event shall any of the MSCI Parties have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

Please refer to Form ADV Part 2A for additional information on the strategy which includes Vontobel’s investment advisory fees.

Vontobel Asset Management, Inc. (Vontobel) is registered with the U.S. Securities and Exchange Commission as an investment adviser under the Investment Advisers Act of 1940, as amended, in the USA. Registration as an Investment Advisor with the U.S. Securities and Exchange Commission does not imply a certain level of skill or expertise. Advisory services for strategy discussed herein are offered through a Participating Affiliate structure between Vontobel Asset Management, Inc., Vontobel Asset Management AG, and Vontobel Asset Management Asia Pacific Ltd.

Although Vontobel believes that the information provided in this document is based on reliable sources, it cannot assume responsibility for the quality, correctness, timeliness or completeness of the information contained in this document. Except as permitted under applicable copyright laws, none of this information may be reproduced, adapted, uploaded to a third party, linked to, framed, performed in public, distributed or transmitted in any form by any process without the specific written consent of Vontobel. To the maximum extent permitted by law, Vontobel will not be liable in any way for any loss or damage suffered by you through use or access to this information, or Vontobel’s failure to provide this information. Our liability for negligence, breach of contract or contravention of any law as a result of our failure to provide this information or any part of it, or for any problems with this information, which cannot be lawfully excluded, is limited, at our option and to the maximum extent permitted by law, to resupplying this information or any part of it to you, or to paying for the resupply of this information or any part of it to you. Neither this document nor any copy of it may be distributed in any jurisdiction where its distribution may be restricted by law. Persons who receive this document should make themselves aware of and adhere to any such restrictions.