International Equities

Emerging Markets

Seeking Well-Rounded Stocks at a Discount

The SBH Emerging Markets strategy is comprised of companies we believe exhibit traditional Value characteristics coupled with positive company momentum factors designed to outperform the market over the long term in a variety of market conditions. We utilize an investment approach that is systematic, diversified, and risk-aware, adhering to a model that efficiently identifies well-rounded stocks that are mispriced. Our optimization process seeks to take significant active risk in areas where alpha can be systematically captured and aims to avoid exposure to uncompensated risks.

Investment Philosophy

We seek to capitalize on Value’s advantage for investors. Long-term investors can look through temporary setbacks, enabling them to take advantage of the long-term benefits. Our investment process is based on the following beliefs:

  • Value Wins Over Time – Compounding long-term gains for investors
  • At times, investor enthusiasm can boost Growth stock valuations to excessive heights
  • Historical experience shows that Value comes roaring back from such periods, typically with very strong excess returns

Strategy Description

Proprietary Ranking Process

  • Quantitative model derived from the best practices of traditional fundamental analysis
  • Each security within the universe is ranked (1-10) based on traditional valuation metrics, as well as momentum and profitability factors
  • Rankings seek to systematically identify undervalued stocks that simultaneously exhibit other attractive characteristics
  • This multi-factor approach targets balanced or “well-rounded” securities

 

Process Built to be Balanced & Robust

 

 

Investment Universe

  • Evaluates approximately 3,000 companies in 26 emerging markets
    –Market capitalization generally greater than $300 million
  • Stocks are grouped by country

 

 

Approach

Quantitively Driven

Systematic, objective methodology that derives its advantage from unemotional adherence to drivers of excess returns. Broad stock coverage facilitated by systematization of our investment methodology.

Valuation

Equity research on international markets has demonstrated that stocks with low valuation ratios have historically produced superior returns over more expensive stocks. Markets are inefficient and thus a disciplined investor can uncover and capitalize on mispricings over the long term.

Intelligent Risk-Taking

We focus our risk allocation where the largest potential reward exists and limit bets that introduce excessive risk levels relative to the associated expected return. Strict adherence to these disciplines, including neutrality to region and sectors, gives the portfolio attractive risk characteristics. We additionally monitor Environmental, Social, and Governance (ESG) factors as a risk measure.

Portfolio Managers

Scott E. Decatur, Ph.D.

Director of Quantitative International Strategies

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Nicholas C. Fedako, CFA

Senior Portfolio Manager

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Investment Vehicles

Separate Account

CIT

Limited Partnership

Literature

Related Insights

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CFA® and Chartered Financial Analyst® are registered trademarks owned by CFA Institute.

You should not treat any opinion expressed as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of the manager’s opinions. The opinions expressed are based upon information the manager considers reliable, but completeness or accuracy is not warranted, and it should not be relied upon as such. Market conditions are subject to change at any time, and no forecast can be guaranteed. Any and all information perceived from this presentation does not constitute financial, legal, tax or other professional advice and is not intended as a substitute for consultation with a qualified professional. The manager’s statements and opinions are subject to change without notice, and Segall Bryant & Hamill is not under any obligation to update or correct any information provided in this presentation.

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