Open main menu
Home
Random
Donate
Recent changes
Special pages
Community portal
Preferences
About Stockhub
Disclaimers
Search
User menu
Talk
Contributions
Create account
Log in
Editing
Templeton Emerging Markets Investment Trust
(section)
Warning:
You are not logged in. Your IP address will be publicly visible if you make any edits. If you
log in
or
create an account
, your edits will be attributed to your username, along with other benefits.
Anti-spam check. Do
not
fill this in!
== Investment process: Bottom-up stock selection<ref name=":2" /> == Sehgal and Ness, who are assisted by portfolio analyst Manish Agarwal, are able to draw on the considerable resources of FTEME’s investment team. In recent years the levels of collaboration and communication within the team have improved; there are regular meetings, both formal and informal, and all analysts and portfolio managers are expected to contribute to investment returns. The managers employ a long-term approach driven by ‘3S’s’: seeking structural growth opportunities, investing in businesses with sustainable earnings power that are trading at a discount to their estimated intrinsic value, and they believe in responsible stewardship of client capital. TEMIT has a three-step investment process: * Idea generation – there is a team of more than 70 analysts and portfolio managers around the globe, who undertake more than 2,000 company meetings a year. Sehgal and Ness consider that the team’s local presence provide a considerable competitive advantage. * Stock research – rigorous analysis to assess whether a company has sustainable earnings power and to determine a proprietary estimate of its intrinsic worth. FTEME’s research platform has coverage of more than 700 companies. In-depth company models are built to evaluate a firm’s financial strength and profitability, and to project future earnings and cash flow. Industry demand and supply models are incorporated into the analysis, along with country and currency macroeconomic considerations. * Portfolio construction – TEMIT’s strategy aims to deliver outperformance irrespective of the direction of the stock market. The portfolio typically has higher quality and growth metrics than the benchmark, but not at excessive valuations. There is a high-conviction approach with the top 10 holdings making up more than 50% of the fund. Portfolio turnover is relatively low at typically less than 20% per year. At the end of May 2022, TEMIT had a modestly higher dividend yield than the benchmark, a lower trailing P/E and price-to-book multiple, and a slightly higher price-to-cash flow multiple. {| class="wikitable" |+Exhibit 13: Portfolio versus the benchmark (at 31 May 2022)<ref>Source: TEMIT.</ref> ! !Portfolio !Benchmark |- |Dividend yield (%) |2.82 |2.75 |- |12-month trailing P/E multiple (x) |10.97 |11.48 |- |Price-to-cash flow multiple (x) |7.26 |6.82 |- |Price-to-book multiple (x) |1.61 |1.71 |} Risk management is also a very important part of the process, with scenario analysis undertaken to ensure the managers are not taking unintentional risks. TEMIT has a diversified portfolio of 60–80 positions invested across the market cap spectrum. All holdings are regularly reviewed to ensure analysts’ recommendations are up to date and reflect any changes in a company’s fundamentals. Sehgal and Ness believe that given the wide dispersion of returns between shares in emerging markets, they can generate alpha via stock selection, which is deemed more important than sector and geographic allocation. The trust’s active share typically ranges from 70% to 85% (this is a measure of how a fund differs from its benchmark, with 0% representing full index replication and 100% indicating no commonality); it is currently 81%. === TEMIT’s approach to ESG === ESG factors are an integral part of TEMIT’s research process. Its managers employ FTEME’s three-pillar framework aiming to be an emerging market leader in sustainable investing: * '''Intentionality''' – assessing companies’ intentionality towards managing material ESG factors with a proprietary scoring system and linking them into valuation models. * '''Alignment''' – mapping the alignment of companies’ products and services to positive and environmental outcomes and United Nations sustainable development goals. * '''Transition''' – identifying companies’ transition potential linked to their incremental progress, using FTEME’s on-the-ground capabilities and experience as active owners to foster positive change. Where material, climate change/carbon analysis is integrated into the bottom-up research process, focusing on assessing the impact on long-term business values. This is part of the holistic approach of integrating ESG analysis with traditional analysis to gain valuable insights into the quality and risks of investee/potential investee companies. For more information, please see TEMIT’s inaugural stewardship report.
Summary:
Please note that all contributions to Stockhub may be edited, altered, or removed by other contributors. If you do not want your writing to be edited mercilessly, then do not submit it here.
You are also promising us that you wrote this yourself, or copied it from a public domain or similar free resource (see
Stockhub:Copyrights
for details).
Do not submit copyrighted work without permission!
Cancel
Editing help
(opens in new window)