Passport Overseas Equity Strategy
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For international equity investing, we believe that applying a global macro framework to evaluate the return potential of countries, sectors, and industries and themes combined with fundamental stock selection, is the best way to generate long-term capital appreciation over a market cycle.
We consider future economic growth of countries and currency movements to be critical drivers of stock returns. We actively select among countries and employs fundamental analysis to identify attractive sectors, industries and themes and equities with the ability to generate long-term earnings growth.
All country/currency, sector, industry and thematic, and stock weightings are driven by a disciplined investment process and a fundamental analysis of inherent quality and valuation characteristics.
A differentiated core approach to global equity investing |
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We combine a top down and bottom up approach to global equity investing. We analyze where we are in the macro cycle, evaluate the return potential of each country through this macro lens and identify stocks that best reflect our views of the current and expected market environment. |
A highly active, high conviction, ‘go anywhere’ core portfolio |
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The portfolio is designed to capitalize on our best ideas in developed, emerging and select frontier markets on an unconstrained basis. The managers seek to generate alpha through high conviction allocations to countries, sectors, industries, and securities. |
A combination of Growth and Value investing styles |
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Style allocations are actively adjusted as we move through the economic cycle. We position the portfolio in those stocks that best represent our definition of ‘Sustainable Growers’ or ‘Compelling Value’ opportunities. |
| 1 | Identifying where we are in the Global Economic Cycle |
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Our process begins with a macro-outlook of the global economic and business cycles to determine positioning in the current and anticipated market environment. |
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| 2 | Country Allocation |
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Within this global context, we conduct original, macro-thematic research to determine each country’s future economic and equity return potential, investment themes and market inefficiencies to determine our country allocations. Using our proprietary country analysis framework that encompasses both quantitative and qualitative inputs and includes rigorous credit and currency analysis, we take overweight positions in those countries where we find the best equity return potential and avoid those countries with macro risks or structural issues. |
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| 3 | Sector, Industry, Thematic Analysis |
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We seek to identify the most attractive equity opportunities through our fundamental sector, industry and security analysis. Our analysis of where we are and where we are heading in the macro cycle helps inform the portfolio positioning across sectors and industries. Coming out of a recession, we typically look to add to cyclicals and industries with high operating or financial leverage if they meet our rigorous fundamental criteria. As we move to later stages based on these cycles, we may begin to opportunistically take profits in some of these investments and position the portfolio more defensively. |
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| 4 | Stock Selection |
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Our stock selection process focuses on specific fundamentals (such as earnings growth, pricing power, competitive landscape and returns on invested capital), valuation metrics and investment sentiment. Within each market we select stocks that best capture our top-down investment case for that market. We invest in companies with solid and improving business fundamentals as well as quality management dedicated to expanding earnings growth. Our “sweet spots” on a growth/value continuum can be categorized as “Sustainable Growers” and “Compelling Value” opportunities. |
Effective September 25, 2024, Didier Rosenfeld became co-portfolio manager for the Strategy.