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 31 August 2023
Fund size $51.92mn
Strategy size $291.53mn
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 31 August 2023
Morningstar Rating Rank
  Rank Percentile Rating
Overall Morningstar Rating™     5-Star
1 year 48/816 6% 2-Star
3 years 19/723 4% 5-Star
5 years 14/646 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 Advisor JOHCM (USA) Inc.
Transfer Agent Northern Trust
Custodian Northern Trust

Investment Background

Data as at 31 August 2023

Strategy Highlights

As at 28 July 2023

Q2 of 2023 was sluggish for emerging markets and the MSCI Emerging Markets Index ended the quarter flattish, lagging developed market indexes. In this tough environment, we managed to outperform due to successful stock selection within a combination of countries and sectors.

China was sluggish due to the lack of material stimulus, weakness of the property market, and slower consumption recovery. The ‘anaemic’ Chinese recovery is illustrated by the weak performance of some of our bottom performers; Shangri-La Asia (high-end hotel operator), Melco International (Macau casino operator), BOE Varitronix (Chinese manufacturer of displays for electric vehicles) and Proya Cosmetics (leading domestic cosmetics brand). The weak commodity sector was the second example of the Chinese weakness, but we benefited from our underweight position.

On the other hand, several countries and sectors within the emerging markets showed positive performance. The Taiwanese technology sector had the biggest positive contribution to the strategy in Q2. The team reduced its position in the consumer technology sector at the beginning of the quarter when it became clear that the expected recovery after two quarters of inventory correction would be shallower and slower than initially expected. At the same time, we were gradually rotating into AI beneficiaries, which accelerated even further after Nvidia’s results. Asian tech (not just in Taiwan) is well positioned for this new trend, with a large part of the AI supply chain located in Asia. Multiple companies are already seeing significant revenue contributions from AI and significant dollar content increase in AI servers compared to traditional servers. Alchip is benefiting from the trend of ‘hyper scalers’ (like Amazon, Meta and others) designing their own chips to replace expensive GPUs from Nvidia with customized solutions. Asia Vital is benefiting from an increase in demand for AI-related heat dissipating solutions.

Brazil was the standout country performer within the MSCI EM index in Q2. The country benefited from the well-anticipated disinflation trends, and the real interest rate in Brazil is approaching 10%. Furthermore, Brazil has also seen improvement in some other key macroeconomic indicators, such as GDP growth, and we could argue that the political environment under Lula is turning out to be more stable than expected by some market participants. We identified stocks that benefited from those well-anticipated macro developments in Brazil; a good example of our Recovery Growth philosophy was LocaWeb Servicos. A company involved in internet, hosting, and software development for SMEs, LocaWeb Servicos was sold and shorted during the big correction, which preceded the huge and fast rebound in Brazil. Such patterns are not unusual in the Brazilian stock market, as local and aggressive investment teams often dominate it. However, we knew the company well, talked to the management, met them, worked on our fundamental analysis, and patiently traded the volatility around the positioning in the stock, depending on the risk factors.

Another major emerging market which showed faster-than-expected disinflation trends was India. The Indian central bank refrained from hiking the interest rate further (surprising the market in April) and there have been growing expectations of interest rate cuts. Strong asset quality helped our Indian non-banking financial holding.

Furthermore, the strategy benefited from its overweight position in Greece and Poland. The recent Greek elections, where the pro-market ‘New Democracy’ party delivered a clear victory, have opened the potential for a sovereign upgrade to ‘investment grade’ for Greece, which would, in turn, decrease funding costs for Greek banks.

In summary, the EM index has been capped by a sluggish recovery pace in China and continuing uncertainty about the Federal Reserve interest rate path. However, many EM countries are doing well in macroeconomic terms and there are positive sector developments that EMs can benefit from going forward.

 

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

Total Return (%)

Data as at August 31, 2023
  1 Month Total Return 3 Month Total Return YTD Total Return 1 Year Total Return Cumulative Since Inception
Advisor Shares Net -2.82 9.54 19.76 16.36 118.03
Institutional Shares Net -2.89 9.53 19.85 16.46 119.61
Benchmark -1.35 9.84 16.12 13.05 85.26

Annualised Return (%)

Data as at June 30, 2023
  1 Year 2 Year 3 Year 4 Year 5 Year 10 Year Annualized Since Inception
Advisor Shares Net 15.74 -3.57 12.50 10.34 6.15 9.19
Institutional Shares Net 15.73 -3.50 12.58 10.44 6.23 9.28
Benchmark 13.28 -5.23 13.72 7.61 4.93 5.14

Monthly returns (%)

Data as at 31 August 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 3.70 -0.51 2.14 6.36 5.98 -2.82 19.76
Benchmark 2023 5.93 -2.85 0.93 0.67 1.11 4.52 6.53 -1.35 16.12

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 31 August 2023
Top 10 holdings
Shriram Transport Finance 1.35%
Elite Material 1.87%
Varun Beverages 1.82%
Alchip 1.25%
KPIT 1.98%
Arcadyan 1.60%
Narayana Health 1.76%
Genus Power Infrastructures 1.70%
Phoenix Mills 1.67%
Vesta 1.45%
Top 10 active weights
Northern Institutional Treasury Portfolio +4.99%
iShares MSCI India Small-Cap ETF +4.25%
iShares MSCI India ETF +3.36%
Indosat +1.91%
Varun Beverages +1.82%
KPIT +1.76%
Narayana Health +1.68%
Genus Power Infrastructures +1.67%
Elite Material +1.54%
Arcadyan +1.54%

Regional / Country breakdown

Data as at 31 August 2023
Portfolio Benchmark Relative
Argentina 2.15% 0% 2.15%
Brazil 3.82% 5.15% -1.32%
China 5.52% 7.56% -2.04%
Greece 2.94% 0.5% 2.43%
India 24.60% 25.39% -0.79%
Indonesia 3.17% 2.13% 1.03%
Mexico 3.98% 2.41% 1.56%
South Korea 10.87% 14.53% -3.65%
Taiwan 19.70% 21.1% -1.39%
United States 6.79% 0% 6.79%

Sector breakdown

Data as at 31 August 2023
Portfolio Benchmark Relative
Information Technology 28.79% 17.73% 11.10%
Financials 17.11% 10.16% 6.90%
Industrials 13.90% 17.29% -3.40%
Consumer Discretionary 12.37% 11.59% 0.80%
Health Care 7.41% 9.11% -1.70%
Consumer Staples 7.13% 6.18% 0.90%
Materials 5.56% 13.00% -7.40%
Real Estate 4.47% 6.19% -1.70%
Communication Services 2.32% 3.64% -1.30%
Utilities 1.59% 3.11% -1.50%
Energy 0.29% 1.94% -1.60%
Cash -0.98% 0.00% -0.98%

Market cap breakdown

Data as at 31 August 2023
Portfolio Benchmark Relative
Large 21.00% 6.31% 14.69%
Mid 53.97% 65.06% -11.10%
Small 17.18% 28.62% -11.44%

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 03/10/2023 Institutional USD 46653M849 20.85 -0.29 -1.37% 21.14
Investor USD 46653M823 20.87 -0.29 -1.37% 21.16
JOHCM Emerging Markets Opportunities Fund 03/10/2023 Advisor USD 46653M203 10.18 -0.13 -1.26% 10.31
Institutional USD 46653M104 10.21 -0.13 -1.26% 10.34
Investor USD 46653M302 10.16 -0.14 -1.36% 10.30
JOHCM Global Select Fund 03/10/2023 Advisor USD 46653M807 12.00 -0.20 -1.64% 12.20
Institutional USD 46653M708 12.04 -0.21 -1.71% 12.25
JOHCM Emerging Markets Small-Mid Cap Equity Fund 03/10/2023 Advisor USD 46653M500 12.47 -0.10 -0.80% 12.57
Institutional USD 46653M401 12.48 -0.10 -0.79% 12.58
JOHCM International Opportunities Fund 03/10/2023 Institutional USD 46653M872 10.58 -0.10 -0.94% 10.68
Regnan Global Equity Impact Solutions 03/10/2023 Institutional USD 46653M716 6.91 -0.11 -1.57% 7.02
TSW Large Cap Value Fund 03/10/2023 Institutional USD 46653M641 12.42 -0.10 -0.80% 12.52
TSW High Yield Bond Fund 03/10/2023 Institutional USD 46653M658 8.62 -0.05 -0.58% 8.67

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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