Strategies
Active Fundamental Equity
International Equity Strategy
|
International Equity Strategy |
|
Strategies
Active Fundamental Equity
International Equity Strategy
|
|
International Equity Strategy
|
The International Equity Strategy looks to generate attractive long-term performance by investing in two types of companies, attractively priced High-Quality Compounders, companies that have the ability to generate sustainably high returns on operating capital employed (ROOCE), and Value Opportunities which are more cyclical companies with reasonable and/or improving fundamentals that are trading at a sufficient margin of safety to compensate for their greater risk. The team believes that a portfolio consisting of both types of stocks, with the flexibility to adjust the mix dependent on valuation and prospects, has the potential to generate attractive long-term returns for investors.
The mix between High-Quality Compounders and Value Opportunities is not a top-down allocation and will vary across the market cycle depending on valuation and perceived prospects. However, the Strategy has typically maintained an overweight to quality companies given their potential for long-term compounding and overall contribution to the Strategy's long-term pattern of asymmetric returns.
The team believes that losing money is worse than missing the chance to make it. The team further believes that benchmarks are inherently risky and does not attempt to manage tracking error. Rather than relative risk, the team's primary concern is absolute risk - the permanent loss of capital. In keeping with the team's emphasis on bottom-up stock selection, risk is assessed at the stock level by evaluating company fundamentals, financials, management, price and what could go wrong. The team uses free cash flows over reported earnings to assess valuation.
Patience Is a Virtue |
| Compounding capital takes time. Markets, however, are obsessed with short-term results. By taking a longer investment view, we attempt to take advantage of any pricing anomalies versus a stock's long-term fair value. |
A Sense of Perspective |
| Trying to beat the market every year is futile. We understand that what matters is capital preservation, particularly in tough years when our clients need performance the most. |
A Balance Based on Price and Prospects |
| Our genuine long-term view and focus on price gives us the flexibility to exploit both high-quality and value opportunities in a time proven process. |
A Strong Heritage |
| A disciplined, fundamental research-based investment philosophy stretching back over 30 years underpins the Strategy. |
| 1 | Screening Universe |
| Assessment of Starting Point and Liquidity High-Quality Compounders
Value Opportunities
| |
| 2 | Kicking the Tires |
| Assess Potential Stock Candidate - High-Quality Compounder, Value Opportunity or Value Trap?
Threats & opportunities for sustainable returns
Management
| |
| 3 | Value |
| |
| 4 | Construct |
|
Team members may be subject to change at any time without notice. The investment team currently has 15 members; information on additional team members can be found on MSIM.com.