The Driehaus Emerging Markets team focuses on investing in emerging markets securities of all capitalizations, through the Driehaus Emerging Markets Growth, Driehaus Emerging Markets Small Cap Equity and Driehaus Emerging Markets Opportunities 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.
The underperformance of emerging market (EM) equities over the past ten years has been frustrating for allocators but in our view has had very clear causes. While a number of things have gone into this relative underperformance, we see the three largest factors as having been company-level profitability trends, the impact of the US dollar, and the volatility of local economic cycles and what that has meant for local interest rates.
Emerging market assets were volatile over the course of 2019 buffeted by trade war concerns and global cyclical risks. By the fourth quarter however, sentiment began to take on a steadily more positive tone.