Mawer Investment Management, a Canadian independent investment firm managing in excess of $40bn across all major asset classes, has launched its first emerging markets fund with allocation to Africa. 

The Mawer Emerging Markets Fund will invest in large- and small-capitalization companies in emerging markets.

According to Peter Lampert, Portfolio Manager, who also co-manages Mawer’s International Equity mandates, “the Africa weight is about 10% (all in South Africa)”. 

He added that he sees opportunities in the following South African stocks: “Discovery Ltd (health and life insurance), AVI (food), Clicks (drug stores), and City Lodge Hotels (hotels)”.

“We see an opportunity to offer clients a high quality EM strategy in accordance with our investment philosophy (buy wealth-creating companies, with excellent management teams at a discount to intrinsic value). We are long term investors and the timing of the launch has nothing to do with what markets are doing,” he told Africa Global Funds.

He said that the Fund is suitable to investors with a long-term horizon and high risk tolerance.

“The Mawer Emerging Markets Equity Fund will follow the same approach as we do for all of our equity funds. We call our approach “Be Boring. Make Money”, which means we ignore fads and take a long-term view of investing. It means we stick to a systematic, disciplined, bottom up investment approach no matter what the market outlook. And it means putting the investment odds in our clients’ favour by focusing on the things we can control,” he added.

Lampert further explained that as bottom up, fundamental investors, the firm seeks securities with sustainable competitive advantages, regardless of industry or economic conditions. 

“Our philosophy directs us towards companies that are wealth-creating, excellent management, and discount to intrinsic value,” he said.

The Fund will be benchmarked against the MSCI Emerging Markets Index.

The investable universe would include companies with headquarters or substantial operations outside of the developed markets as defined by MSCI. 

There are approximately 6,000 such companies with a market capitalization greater than $250m. 

The Fund would primarily invest in equity securities but may also seek to invest in preferred equity securities and derivatives such as warrants and P-Notes.

Although there are many emerging markets mutual funds and ETFs available to investors, many simply invest in the largest companies, which are not necessarily the best investment opportunities.

Despite the large market size, competition is limited in Canada with only 23 Emerging Markets equity pooled funds in Canada, according to the quarterly Pooled Fund Survey published by RBC Investor & Treasury Services. 

“The Fund would likely be a superior option for institutional and retail clients seeking a standalone Emerging Markets mandate.  We strive for above-average, long-term, risk-adjusted returns,” said Lampert.

Mawer has over 30 years of experience investing in emerging markets within our International equity strategy and more recently, in its global small cap and global equity strategies.