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We believe that emerging markets are only partially efficient and that fundamentally driven, active management of emerging market equity portfolios can add value for clients.

Investment Approach

The Columbia Emerging Market Equity strategy seeks to provide consistent, repeatable excess returns, relative to the MSCI Emerging Market Index. Our management team combines top-down and bottom-up fundamental and quantitative analysis with risk management techniques to construct a portfolio of high-quality companies with sustainable long-term growth prospects.

Distinguishing Features

  • Six dedicated portfolio managers averaging more than 15 years of investment experience*
  • Knowledge-sharing among international portfolio managers integrating investment themes around the globe
  • Considers both top-down and bottom-up views; security selection plays a significant role in determining overall asset allocation
  • Considers overall portfolio risk and seeks to maximize the risk/reward tradeoff in a number of factors including country, sector, industry and stock-specific risk

Investment Process

Define and evaluate investable universe
  • Primary universe is the MSCI Emerging Markets universe. In addition, up to 20% of the portfolio can be invested in frontier markets and developed nations’ companies that have fundamentals driven by the emerging markets
  • Fundamental screening focus looking at improving operating margins, return on invested capital, anticipates acceleration of these metrics and valuations versus growth potential
  • Quantitative model factors that include valuation, earnings quality, price and earnings momentum
Conduct research and valuation analysis
  • Top-down macro environment and theme analysis to identify factors that will influence potential returns and earnings growth for particular countries and market sectors
  • Bottom-up company analysis to identify companies that are beneficiaries of a given economic scenario or theme
  • Fundamental research that focuses on indicators of sustainable long-term growth, improving balance sheets, ability to finance growth internally and sustainable advantage in the marketplace
Construct portfolio and manage risk
  • Diversified portfolio of 100 - 160 holdings
  • Allocate to countries and sectors based on the team’s outlook for the economy and markets coupled with valuation
  • Individual company selection plays a significant role: confirms if there should be an overweight based off the macro assumptions
  • Positive exposure to the quantitative model
  • Confirm parameters of maximum position size of +200 bps active weight, sector weight ranges of +/-1000 bps, country weight range of +/-1000 bps, and tracking error range of 3% -7%

*as of 6/30/12