JOHCM Emerging Markets Discovery Fund (JOMEX)

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Fund Description

Experienced emerging equity market investors Emery Brewer, Dr Ivo Kovachev and Stephen Lew use a predominantly stock-picking approach in finding opportunities in the fast-growing developing markets. They focus on growth companies that have the potential to develop world-class products or become industry leaders in local markets.

Investment Strategy
  • The team follows a predominantly bottom-up, stock selection-driven process, complemented by a sector and country overlay, that seeks to identify the most dynamic small-cap growth stocks within their investment universe
  • The team believes share prices follow growth - by making extensive use of screening tools and closely tracking corporate news flow, the team aims to identify companies demonstrating strong revenue and earnings growth, positive earnings revisions and other signs of improvement in operational performance;
  • A flexible investment approach that identifies three types of growth stocks: classic growth e.g. smartphone manufacturers; commodities growth e.g. resources companies growing reserves or production; and recovery growth, typically sectors or countries that appear oversold;
  • Portfolio typically comprises 70-120 stocks with market caps of less than US$8 billion and maximum weights in any one sector or country of 30%
  • Dr Ivo Kovachev

    Senior Fund Manager

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  • Emery Brewer

    Senior Fund Manager

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  • Stephen Lew

    Senior Fund Manager

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Other Emerging Markets Equity Funds

JOHCM Emerging Markets Opportunities Fund (JOEMX)

For fund managers James Syme, Paul Wimborne and Ada Chan, identifying the most attractive emerging markets in which to invest is the most important influence on investment performance. Through an extensive process that focuses on growth, liquidity, currency, management/politics and valuations, they produce country allocation targets for each...

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Fund details

Data as at 28 February 2023
Fund size $41.50mn
Strategy size $258.43mn
Benchmark MSCI Emerging Markets Small Cap NR
Share classes
Advisor (Launch date) 28-January-2016
Institutional (Launch date) 17-December-2014
Minimum investment
Advisor $0
Institutional $1,000,000
Fund codes
Fund Ticker Share Class Fund Number CUSIP
JOMEX Advisor 285 46653M500
JOMMX Institutional 685 46653M401
Fees and Expenses
Fund Ticker Share Class Net Expense Ratio* Gross Expense Ratio*
JOMEX Advisor 1.59% 1.75%
JOMMX Institutional 1.49% 1.65%

*Expense ratios as stated in the latest prospectus. JOHCM (USA) Inc. has contractually agreed to waive fees and reimburse expenses so that the Net Total Operating Expenses do not exceed the stated amounts until January 28, 2024.

Fund ratings

Data as at 28 February 2023
Morningstar Rating Rank
  Rank Percentile Rating
Overall Morningstar Rating™     5-Star
1 year 309/816 54%
3 years 8/732 2% 5-Star
5 years 33/650 4% 5-Star
Morningstar Category Diversified Emerging Markets

Morningstar rankings are based on the Institutional share class and on total returns. Past performance does not guarantee future results. © 2022 Morningstar. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.

 

Administration

Investment Advisor JOHCM (USA) Inc.
Transfer Agent Northern Trust
Custodian Northern Trust

Investment Background

Data as at 28 February 2023

Strategy Highlights

As at 31 December 2022

Q4 of 2022 was a volatile period for emerging markets, with some critical rotations and reversals. Continued selling culminated with the October bottom, coinciding with the dollar high; emerging markets swiftly rebounded in November, overlapping with the fall in the dollar, while December was relatively flat.

However, it is important to mention the underlying activity in some relevant EM markets.

As usual, we must start with China. We foresaw the change in Chinese policy following the Communist party congress, and it was logical to anticipate some relaxation of the harsh Covid rules in the country. We began to increase our allocation in China, and we made that gradual move by investing in some higher growth names and adding to our ‘re-opening’ plays. The fund was underweight in China for the whole year, which was a good call. However, the sudden change of heart among the top circles in China, and even their willingness to support the two worst hit sectors, internet and property, led to a short squeeze. We recognised and identified that change of heart; however, repositioning the portfolio did take a bit of time. Hence, China was a significant negative contributor for Q4.

While the second worst contributor for the quarter was South Korea – where we saw a typical reversal with some of our previous winners, investors should be attentive to the selloff that occurred in Brazil over December. The domestic companies in Brazil had an adverse reaction to the presidential elections and, in the process, damaged their market. Consequently, interest rates, already among the highest in the world, suddenly rose during the political turmoil. Brazil’s volatility should not be a surprise, but as with many other things, it is often about the degree, the magnitude and the speed. We decreased our country allocation and tried to stay in arguably more ‘defensive’ stocks, but that did not help much.

The attribution report shows that information technology and minor consumer discretionary were the two worst sectors for the quarter, as the correction in technology shares, particularly Taiwanese technology shares, created several performance detractors. On the other hand, stock selection in the consumer staples sector provided positive drivers to performance. For example, Varun Beverages, a purveyor of soft drinks and snacks in India, reported positive results during the quarter.

Being nimble, flexible and staying on top of the game is compulsory in our job. There are periods, shorter ones, that hit fund performance unproportionally.

Writing this analysis in the second week of January allows me to emphasise the good arguments in favour of EM Small Cap again. The EM Small Cap index finally broke out again; all the previous positive arguments have finally been recognised by the other global players and even the global macro picture looks optimistic suddenly. China continues with its rebound and we continue to decrease our Chinese underweight more significantly through investments in growth names and adding to our ‘re-opening’ plays. Conversely, Brazil continues with its political disruption, whilst it remains the country with most room to cut interest rates. That is why we prefer to play the relatively new theme of ‘friend-shoring’ and ‘near-shoring’ – Mexico being the best example. India is an interesting problem, as it was a big beneficiary of Chinese underperformance in 2022.

 

Sources for all data: JOHCM/Bloomberg (unless otherwise stated).

Total Return (%)

Data as at February 28, 2023
  1 Month Total Return 3 Month Total Return YTD Total Return 1 Year Total Return Cumulative Since Inception
Advisor Shares Net -2.83 0.54 3.75 -11.36 88.88
Institutional Shares Net -2.91 0.55 3.75 -11.42 90.10
Benchmark -2.85 1.84 2.90 -9.48 64.17

Annualised Return (%)

Data as at December 31, 2022
  1 Year 2 Year 3 Year 4 Year 5 Year 10 Year Annualized Since Inception
Advisor Shares Net -21.33 -1.99 5.84 8.78 2.27 7.74
Institutional Shares Net -21.37 -1.97 5.89 8.85 2.35 7.82
Benchmark -18.02 -1.33 5.11 6.67 1.06 4.17

Monthly returns (%)

Data as at 28 February 2023
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Annual
Fund 2014 1.97 1.97
Benchmark 2014 3.30 3.30
Fund 2015 1.49 3.66 3.77 9.30 1.72 -2.94 -7.44 -10.36 -0.57 7.03 -0.96 -0.20 2.81
Benchmark 2015 1.44 2.26 -0.14 9.06 0.41 -4.57 -7.77 -9.65 0.00 5.91 -2.57 0.08 -6.84
Fund 2016 -5.96 -0.53 9.27 3.64 -1.79 3.84 5.15 2.47 0.74 -0.93 -5.95 -0.97 8.18
Benchmark 2016 -7.88 -0.36 10.00 1.49 -3.53 2.54 4.28 1.84 1.31 -1.48 -4.67 -0.16 2.26
Fund 2017 4.43 4.59 3.31 3.33 2.81 -0.02 6.59 3.86 -1.09 3.78 1.65 3.72 43.58
Benchmark 2017 4.68 5.20 2.63 1.13 0.69 0.78 3.57 1.95 0.04 3.51 1.76 3.70 33.82
Fund 2018 4.94 -2.62 0.98 -1.90 -1.13 -3.58 -1.89 -3.73 -4.04 -10.45 4.69 -2.64 -20.16
Benchmark 2018 5.80 -4.10 -1.27 -0.11 -2.08 -6.56 1.22 -2.11 -3.32 -10.55 5.47 -1.60 -18.59
Fund 2019 6.54 1.86 1.32 0.46 -6.53 6.40 -0.43 -2.35 1.03 4.90 -1.80 6.26 18.12
Benchmark 2019 5.38 1.30 0.94 0.21 -4.92 3.92 -1.49 -5.01 1.96 3.82 -0.59 6.11 11.50
Fund 2020 0.36 -6.66 -20.59 14.12 5.30 8.30 9.89 1.93 -2.29 -0.83 9.78 7.04 23.49
Benchmark 2020 -3.99 -7.05 -23.09 13.94 2.36 9.01 9.24 4.10 -1.64 -0.55 14.09 7.72 19.29
Fund 2021 -1.08 5.67 2.19 6.70 2.62 2.68 -1.83 2.14 -2.03 -0.07 -0.45 4.04 22.11
Benchmark 2021 0.08 5.96 1.53 6.04 1.93 2.93 -1.31 1.16 -1.99 0.18 -2.94 4.21 18.75
Fund 2022 -4.53 -3.54 2.11 -6.36 0.36 -10.59 2.29 0.13 -8.61 0.74 8.88 -3.09 -21.33
Benchmark 2022 -4.42 -2.50 2.66 -5.02 -1.64 -10.53 2.76 2.48 -10.03 -0.07 9.41 -1.03 -18.02
Fund 2023 6.77 -2.83 3.75
Benchmark 2023 5.93 -2.85 2.90

Expense Ratio (%)

Data as at February 28, 2022
Share Class Gross Expense* Net Expense*
Advisor 1.75% 1.59%
Institutional 1.65% 1.49%

Important Information

The performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data quoted. Investors may obtain performance information current to the most recent month-end, within 7 business days at www.johcm.com or by calling 866-260-9549 or 312-557-5913.

Returns shown, unless otherwise indicated, are total returns, with dividends and income reinvested. Returns for periods of less than one year are not annualized. Fee waivers are in effect; if they had not been in effect performance would have been lower.

The MSCI Emerging Markets Small Cap Index is a free float-adjusted market capitalization index that is designed to measure the performance of small capitalization equities in the emerging markets. The MSCI Emerging Markets Small Cap Index includes small cap representation across 23 Emerging Markets countries. Investing in an index is not possible.Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.

Historical performance of the Emerging Markets Opportunities Fund for Class II Shares prior to its inception is based on the performance of Class I Shares, the share class most similar to Class II. The performance of Class II Shares has been adjusted to reflect differences in expenses.

*Expense ratios as stated in the latest prospectus. JOHCM (USA) Inc. has contractually agreed to waive fees and reimburse expenses so that the Net Total Operating Expenses do not exceed the stated amounts until January 28, 2024.

Top 10 holdings and active weights

Data as at 28 February 2023
Top 10 holdings
KPIT 1.93%
Global Unichip Corporation 1.90%
E Ink 1.79%
Voltronic Power 1.69%
Varun Beverages 1.65%
Alchip 1.62%
EcoPro 1.58%
Vesta 1.50%
Airtac Intl. Group 1.42%
Shangri-La Hotels and Resorts 1.37%
Top 10 active weights
E Ink +1.79%
KPIT +1.76%
Voltronic Power +1.69%
Varun Beverages +1.65%
Global Unichip Corporation +1.56%
Airtac Intl. Group +1.42%
Alchip +1.40%
Shangri-La Hotels and Resorts +1.37%
Melco International Development +1.34%
Vesta +1.32%

Regional / Country breakdown

Data as at 28 February 2023
Portfolio Benchmark Relative
Brazil 5.99% 4.92% 1.07%
China 8.13% 9.81% -1.67%
Greece 2.91% 0.54% 2.37%
Hong Kong 7.20% 0% 7.2%
India 15.73% 21.96% -6.23%
Indonesia 3.08% 2.64% 0.43%
Mexico 3.00% 2.38% 0.62%
South Korea 11.33% 14.45% -3.11%
Taiwan 18.57% 21.62% -3.04%
Thailand 2.83% 3.68% -0.85%
Cash 3.76% 0% 3.76%

Sector breakdown

Data as at 28 February 2023
Portfolio Benchmark Relative
Information Technology 22.37% 17.24% 5.20%
Consumer Discretionary 19.32% 10.92% 8.40%
Industrials 12.70% 15.81% -3.10%
Materials 10.03% 13.60% -3.60%
Health Care 7.81% 9.31% -1.50%
Financials 7.20% 10.47% -3.30%
Consumer Staples 5.95% 6.77% -0.80%
Real Estate 5.28% 6.64% -1.30%
Communication Services 1.99% 4.09% -2.10%
Utilities 1.68% 3.08% -1.40%
Energy 1.48% 2.02% -0.50%
Cash 3.76% 0.00% 3.76%

Market cap breakdown

Data as at 28 February 2023
Portfolio Benchmark Relative
Large 20.31% 1.84% 18.47%
Mid 57.63% 66.13% -8.50%
Small 18.47% 32.03% -13.56%

Important Information

Fund holdings, sector allocation, regional allocation and top 10 countries are subject to change without notification.

Fund

As at noon Share class Currency CUSIP Number NAV Change Change % Previous
JOHCM International Select Fund 29/03/2023 Institutional USD 46653M849 21.29 0.19 0.90% 21.10
Investor USD 46653M823 21.34 0.19 0.90% 21.15
JOHCM Emerging Markets Opportunities Fund 29/03/2023 Advisor USD 46653M203 10.70 0.17 1.61% 10.53
Institutional USD 46653M104 10.73 0.17 1.61% 10.56
Investor USD 46653M302 10.69 0.16 1.52% 10.53
JOHCM Global Select Fund 29/03/2023 Advisor USD 46653M807 12.49 0.12 0.97% 12.37
Institutional USD 46653M708 12.53 0.12 0.97% 12.41
JOHCM Emerging Markets Small-Mid Cap Equity Fund 29/03/2023 Advisor USD 46653M500 11.57 0.11 0.96% 11.46
Institutional USD 46653M401 11.58 0.11 0.96% 11.47
JOHCM Global Income Builder Fund 29/03/2023 Advisor USD 46653M799 9.73 0.00 0.00% 9.73
Institutional USD 46653M815 9.73 0.00 0.00% 9.73
Investor USD 46653M781 9.73 0.00 0.00% 9.73
JOHCM International Opportunities Fund 29/03/2023 Institutional USD 46653M872 10.59 0.12 1.15% 10.47
JOHCM Credit Income Fund 29/03/2023 Institutional USD 46653M740 8.97 0.00 0.00% 8.97
Regnan Global Equity Impact Solutions 29/03/2023 Institutional USD 46653M716 7.26 0.06 0.83% 7.20
TSW Large Cap Value Fund 29/03/2023 Institutional USD 46653M641 12.44 0.11 0.89% 12.33
TSW High Yield Bond Fund 29/03/2023 Institutional USD 46653M658 8.67 0.03 0.35% 8.64

Important Information

The performance data quoted represents past performance; past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The Fund's current performance may be lower or higher than the performance data quoted. Investors may obtain performance information current to the most recent month-end, within 7 business days at www.johcm.com or by calling 866-260-9549 or 312-557-5913.

Returns shown, unless otherwise indicated, are total returns, with dividends and income reinvested. Returns for periods of less than one year are not annualized. Fee waivers are in effect; if they had not been in effect performance would have been lower.

The MSCI Emerging Markets Small Cap Index is a free float-adjusted market capitalization index that is designed to measure the performance of small capitalization equities in the emerging markets. The MSCI Emerging Markets Small Cap Index includes small cap representation across 23 Emerging Markets countries. Investing in an index is not possible.Source: MSCI. MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.

Historical performance of the Emerging Markets Opportunities Fund for Class II Shares prior to its inception is based on the performance of Class I Shares, the share class most similar to Class II. The performance of Class II Shares has been adjusted to reflect differences in expenses.

*Expense ratios as stated in the latest prospectus. JOHCM (USA) Inc. has contractually agreed to waive fees and reimburse expenses so that the Net Total Operating Expenses do not exceed the stated amounts until January 28, 2024.

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