The Driehaus Emerging Markets team focuses on investing in emerging markets securities of all capitalizations, through the Driehaus Emerging Markets Growth, Driehaus Emerging Markets Opportunities and Driehaus Emerging Markets Small Cap Equity strategies. The strategies provide investors with exposure to companies experiencing growth inflections in addition to positive earnings revisions and medium-term (price) momentum, two factors that are positively correlated to alpha generation. The team is led by portfolio managers Howard Schwab, Chad Cleaver and Richard Thies.
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The strategy seeks to outperform the MSCI Emerging Markets Index over full market cycles.
The strategy aims to outperform MSCI Emerging Markets Small Cap Index.
The strategy seeks to provide superior risk-adjusted returns and higher total return than the MSCI Emerging Markets Index over a full market cycle.
The team employs a growth-oriented investment philosophy focusing on identifying company-specific growth inflection points and exploiting associated marketplace inefficiencies. Our philosophy hinges on a belief that market expectations tend to be ‘anchored’ to historical information and that points of inflection therefore introduce dislocations between market expectations and fundamentals which generate significant alpha capture opportunities. The team combines fundamental, macro and behavioral analysis with a nimble/active investment approach to quickly identify inefficiencies and generate a portfolio which uniquely seeks to achieve superior aggregate growth rates as well as superior risk characteristics.
Governance standards on the whole are lacking in emerging markets compared to those in developed markets, though they have been improving over the past many years. We have always placed a very high focus on governance in our emerging markets strategies, in part, because it is such a differentiating factor within the asset class and because accurately assessing governance risks has been an essential tool for limiting downside risk in our portfolios.
Much the way living through this period makes you feel like one day bleeds into the next, each day indistinguishable from the last. So it is for the main trends in emerging markets and the themes we have written about here the past few updates generally remain the same, with the main change being the relative valuation of some of the winners from the pandemic. Countries across emerging markets are in vastly different situations with regard to the pandemic and that is creating more opportunity than normal for active managers.