Due to launch on 13 July, the EM Value Fund will combine valuation and minimum variance metrics – labelled ‘smart passive’ – to target low-priced equities across the emerging market spectrum.
The fund will utilise a similar systematic approach to 7IM’s existing value range, though with a slightly stronger emphasis on value over profitability and growth in its stock selection process.
Benchmarked against the MSCI Emerging Markets Index, tracking error on the fund will not have a specified limit, though it is expected to be around 2-3%.
Managed by Alessandro Laurent and Christopher Cowell, the fund portfolio will contain 100-140 stocks on a country and sector-neutral basis, with leeway to be around 10% over or underweight in a space depending on market conditions.
“It is a systematic strategy that is designed to do well in all scenarios, and one way of doing that is constraining the fund in terms of tracking error,” said Peter Sleep, senior investment manager at 7IM.
“Pure value and pure minimum variance funds work through time but can underperform for periods of three or four years, which can provide a headache. It is very much a controlled fund, but will try to outperform.”
Laurent added: “The portfolio will be pretty much country and sector neutral, trying to pick up the right value stocks. We will be much less focused on small-caps than in an equally-weighted portfolio.
“This is a good moment to find value in emerging markets and we believe that the strategy will capture that value.”
Sitting alongside the firm’s existing UK, US and European ex-UK Value strategies, the EM fund is available in Z (0% AMC) and C (0.25% AMC) share classes with ongoing charge figures of 0.35% and 0.4% respectively.
