From an investable universe of about 4 000 shares, we determine the top 200 ranking shares based on our GEM screening criteria and prioritise these shares into a focused idea list.
Narrowing down the universe
We then perform in depth proprietary research on these shares to determine quality, corporate governance credentials and valuations. From the ranking table, we construct a fund of 40 to 80 stocks, with individual stock weightings adjusted for risk versus reward, level of conviction and corporate governance rating together with valuation upside.
The next step is to analyse and understand the diversification characteristics of the fund. For shares with similar drivers, we prefer to own shares that are more attractively priced relative to their intrinsic value. From a risk perspective, we analyse the fund on risk systems to get a deeper and more quantitative understanding of its risk and volatility characteristics.
As a final portfolio construction measure, we ensure that the fund meets our excess return targets, risk controls and mandate requirements and reflects our country and sector views relative to the benchmark.