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%
  • Emery Brewer

    Senior Fund Manager

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  • Dr Ivo Kovachev

    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 and Paul Wimborne, 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 of the 20...

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Fund details

Data as at 31 October 2022
Fund size $34.29mn
Strategy size $239.56mn
Maximum capacity USD 1bn (includes the Fund and any segregated mandates for which the Senior Fund Manager is responsible)
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, 2023.

Fund ratings

Data as at 31 October 2022
Morningstar Rating Rank
  Rank Percentile Rating
Overall Morningstar Rating™     5-Star
1 year 94/804 20%
3 years 6/723 2% 5-Star
5 years 13/642 3% 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 Adviser J O Hambro Capital Management Limited
Transfer Agent Northern Trust
Custodian Northern Trust

Strategy Highlights

As at 30 September 2022

Most of our clients (and readers) are well aware of the developments in the market, as well as our current views on the direction of the markets as set out in our regular monthly reports. As with regard to the third quarter as a whole, market weakness was consistent with what we have been seeing all this year, with strong rhetoric from the Federal Reserve flowing into higher US yields and a stronger dollar. A lot of the damage is happening in the developed world, as in the UK, where poor macroeconomic policies led to another attack on the pound, in some cases putting stress on other currency pairs. The war in Ukraine has had an impact on Austria, which is often used as a proxy for Eastern Europe exposure. There were outflows from emerging markets in the quarter, but much of it seemingly due to the bigger problems facing developed Europe. At this moment, both the euro and the pound are waiting for a really serious commitment from Madame Christine Lagarde and from Governor Andrew Bailey, respectively, particularly in the face of the stronger rhetoric of Chairman Powell. Certainly, in these conditions, it is difficult for emerging markets to avoid negative consequences, even if at a second derivative. At the end of the quarter, though, the EM index remained ahead of both Nasdaq and developed Europe year to date. 

We managed to outperform in a number of the better markets, mainly Brazil. Before the current inflationary crisis in the West, Brazil was crumbling under the weight of huge interest rate increases by the Banco Central do Brasil. We believe that trend is now peaking and we see a lot of good and now reasonably valued companies in the market, many with the prospect of attractive forward performance, with still greater potential should the political and financial environment stabilise. 

India, surprisingly, was a slight underperformer for the quarter in spite of our neutral weighting. The largest position in the portfolio, Varun Beverages, did well on a relative and absolute basis. This was offset, however, by PVR, the cinema chain, which was negative on uncertainty surrounding the outcome of a merger. 

In the Greater China region, we maintained our underweight in Taiwan on the back of political tensions between Taiwan and mainland China and the weak semiconductor cycle. The Taiwan underweight was the main contributor behind the country outperformance. We also have a slight underweight position in China, which has struggled under the stringent zero-Covid policy. Our China We underperformed slightly as Xtep the sports apparel manufacturer was hurt due to COVID-related lockdowns.

Markets are often indiscriminate in periods of volatility and negativity, and sometimes arguably 'better' stocks are pulled down. But September is finally gone, short positions are being covered and we wait to see the effect of differences in interest rates. Narrower differentials are likely to see a correction in the US dollar trade-weighted index, which will help emerging markets push through the current short squeeze. Stabilisation of macro factors, including interest rates and currencies, is very important, as it provides the basis for investors to reassess the situation, especially valuations, and with a change of perspective start to again consider good buying opportunities. Escalation of the war in Ukraine remains a live issue, but markets are defensively positioned and the fourth quarter is traditionally more optimistic.

 

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

Total Return (%)

Data as at October 31, 2022
  1 Month Total Return 3 Month Total Return YTD Total Return 1 Year Total Return Cumulative Since Inception
Advisor Shares Net 0.77 -7.76 -25.45 -22.81 72.53
Institutional Shares Net 0.77 -7.75 -25.48 -22.81 73.64
Benchmark -0.07 -7.87 -24.29 -23.42 47.34

Annualised Return (%)

Data as at September 30, 2022
  1 Year 2 Year 3 Year 4 Year 5 Year 10 Year Annualized Since Inception
Advisor Shares Net -23.44 2.60 6.87 4.71 2.84 7.15
Institutional Shares Net -23.44 2.64 6.94 4.78 2.93 7.24
Benchmark -23.23 4.86 5.54 2.66 1.25 3.26

Monthly returns (%)

Data as at 31 October 2022
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 0.32 -10.56 2.25 0.18 -8.63 0.77 -25.45
Benchmark 2022 -4.42 -2.50 2.66 -5.02 -1.64 -10.53 2.76 2.48 -10.03 -0.07 -24.29

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, 2023.

Top 10 holdings and active weights

Data as at 31 October 2022
Top 10 holdings
Varun Beverages 2.88%
KPIT 2.23%
E Ink 2.02%
Narayana Health 1.86%
Phoenix Mills 1.76%
WNS 1.73%
Central Plaza Hotel 1.63%
PVR Cinemas 1.59%
SL Corporation 1.57%
Hyundai Mipo Dockyard 1.44%
Top 10 active weights
Varun Beverages +2.88%
KPIT +2.07%
E Ink +2.02%
Narayana Health +1.78%
WNS +1.73%
Phoenix Mills +1.56%
Central Plaza Hotel +1.55%
SL Corporation +1.54%
PVR Cinemas +1.48%
Voltronic Power +1.35%

Regional / Country breakdown

Data as at 31 October 2022
Portfolio Benchmark Relative
Brazil 11.15% 7.61% 3.54%
Canada 2.13% 0% 2.13%
China 7.61% 7.49% 0.11%
Germany 1.89% 0% 1.89%
India 24.74% 25.62% -0.87%
Indonesia 3.29% 2.75% 0.54%
Philippines 1.74% 0.92% 0.81%
South Korea 10.94% 12.93% -1.98%
Taiwan 12.47% 18.6% -6.13%
Thailand 5.55% 3.95% 1.6%
Cash 3.61% 0% 3.61%

Sector breakdown

Data as at 31 October 2022
Portfolio Benchmark Relative
Information Technology 22.62% 15.60% 7.00%
Industrials 14.74% 15.54% -0.80%
Consumer Discretionary 13.83% 12.60% 1.20%
Health Care 9.35% 8.50% 0.90%
Materials 9.09% 13.35% -4.30%
Financials 8.19% 11.41% -3.20%
Consumer Staples 8.01% 6.65% 1.30%
Real Estate 3.82% 6.48% -2.70%
Communication Services 3.41% 3.52% -0.10%
Energy 2.11% 2.50% -0.40%
Utilities 1.16% 3.79% -2.60%
Cash 3.61% 0.00% 3.61%

Market cap breakdown

Data as at 31 October 2022
Portfolio Benchmark Relative
Large 12.63% 2.86% 9.78%
Mid 64.15% 59.87% 4.28%
Small 18.90% 37.27% -18.37%

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 02/12/2022 Institutional USD 46653M849 21.05 -0.07 -0.33% 21.12
Investor USD 46653M823 21.03 -0.08 -0.38% 21.11
JOHCM Emerging Markets Opportunities Fund 02/12/2022 Advisor USD 46653M203 10.68 -0.01 -0.09% 10.69
Institutional USD 46653M104 10.71 -0.01 -0.09% 10.72
Investor USD 46653M302 10.68 -0.01 -0.09% 10.69
JOHCM Global Select Fund 02/12/2022 Advisor USD 46653M807 14.14 -0.01 -0.07% 14.15
Institutional USD 46653M708 14.19 -0.02 -0.14% 14.21
JOHCM Emerging Markets Small-Mid Cap Equity Fund 02/12/2022 Advisor USD 46653M500 11.41 0.04 0.35% 11.37
Institutional USD 46653M401 11.42 0.04 0.35% 11.38
JOHCM Global Income Builder Fund 02/12/2022 Advisor USD 46653M799 9.85 -0.02 -0.20% 9.87
Institutional USD 46653M815 9.85 -0.03 -0.30% 9.88
Investor USD 46653M781 9.84 -0.03 -0.30% 9.87
JOHCM International Opportunities Fund 02/12/2022 Institutional USD 46653M872 10.20 0.02 0.20% 10.18
JOHCM Credit Income Fund 02/12/2022 Institutional USD 46653M740 8.93 0.00 0.00% 8.93
Regnan Global Equity Impact Solutions 02/12/2022 Institutional USD 46653M716 7.44 -0.01 -0.13% 7.45
TSW Large Cap Value Fund 02/12/2022 Institutional USD 46653M641 14.74 0.04 0.27% 14.70
TSW High Yield Bond Fund 02/12/2022 Institutional USD 46653M658 8.67 0.01 0.12% 8.66

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, 2023.

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