EGA International Small Cap Strategy

EGA International Small Cap Strategy

Strategy Overview

INVESTMENT OBJECTIVE

  • Sustainable excess returns vs. the MSCI EAFE/World Ex-US Small Cap Growth Index over the course of a full market cycle, typically three to five years, with superior risk-adjusted returns
  • Investment universe is non-US developed market companies with a market capitalization of $5 billion or less. Invests in emerging markets companies opportunistically, up to a maximum of 20%

INVESTMENT PHILOSOPHY

  • We believe that earnings growth drives stock prices. Investors tend to underestimate the magnitude and/or duration of the earnings growth driven by companies undergoing positive, sustainable fundamental change. Our investment discipline is focused on identifying these companies.
  • Active managers need to be stock pickers. This means having conviction in their favorite stocks by sizing their positions appropriately.
  • Risk management is critical. It is the compounding of alpha by protecting it in bear markets and capturing it in bull markets that is key to delivering sustainable alpha.

INVESTMENT APPROACH

Focused fundamental bottom-up research:

  • Identify companies undergoing some sort of positive fundamental change (i.e. new product/service, new market, new management, new business model, etc.)
  • Determine the sustainability by analyzing the competitive advantage
  • Evaluate the stock-specific risks
  • Multifaceted risk management approach

Concentrated portfolio of typically 40-60 positions with 30% - 40% invested in top 10 positions

Strict capacity discipline to preserve the alpha opportunity

DOCUMENTS

  • Commentary