Institutional Strategies

Emerging Markets Equity

A high-conviction portfolio that utilizes top-down analysis of macroeconomic and thematic factors to identify key countries and sectors for growth, supported by fundamental research to drive security selections. As an active manager, we believe the inefficient nature of emerging markets provides us the opportunity to find companies offering attractive risk/return potential and the ability to outperform relative to our benchmark index.

Investment Philosophy

The inefficient nature of emerging markets provides us the potential opportunity to generate returns that, over the long term, exceed those of the index.

  • Top-down analysis is critical in emerging markets as region and country dynamics are significant drivers of market returns
  • A focus on companies that benefit from long-term secular or cyclical industry themes is powerful in emerging markets where industries are young in their lifecycles
  • Deep fundamental research is crucial in emerging markets where information is less structured
  • We believe the flexibility to invest across both growth and value companies enables the strategy to generate more consistent returns through different market environments

Investment Process

The Ivy Emerging Market Equity strategy begins with a top-down analysis of countries and investment themes. Country views are formulated through a systematic proprietary model combined with research from the investment team. Theme development is driven by the global investment team who continuously looks for sustainable industry growth drivers and earnings cycles in cyclical industries.

Through extensive travel, in-house research, and due diligence checks, the team builds an investment thesis for each individual company. An investment is initiated when they believe future growth is not reflected in the current valuation. Within emerging markets, governance is crucial and a key characteristic considered in all investments. Additionally, an independent risk management team provides oversight for the strategy.

Top-Down illustration
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Key Features

Composite Performance History Since 3/1/2014
Benchmark MSCI Emerging Markets Index
Market Capitalization No formal minimum – the strategy seeks companies across the market capitalization spectrum.
Annualized Turnover Typically 60–80%
Tracking Error Residual of the strategy's investment approach, but has historically ranged from 500–700 basis points.
Cash Allocation Cash is raised as a residual of stock selection process and is typically less than 5%, with a maximum allocation of 15%.
Sector Ranges Relative to Index 0–1.25X – materials
0–1.50X – energy, utilities
0–2.50X – consumer staples/discretionary, real estate
0.5–1.50X – financials
0.5–2.0X – communication services, industrials, information technology
0.5–4.0X – health care
Security Concentration Typically 50-80 positions. Position sizes are generally 1% to 3.5%. Mega-cap holdings are limited to 8% of the portfolio or 4% relative overweight to benchmark allocation.
Currency Hedging Minimal and view incorporated in stock selection process. Currency hedging used when cost of expressing a view is attractive. Currency hedging has averaged less than 10% of portfolio assets and we intend not to exceed 20%
Investment Vehicles Institutional Separate Account
Collective Investment Trust
U.S. Mutual Fund: Institutional Share Class