Doddington Emerging Markets Fund LLC
A high conviction global emerging market equity strategy which combines fundamental bottom-up research with valuation discipline.
Investment objective
The Fund seeks to achieve over the long term a total return in excess of that of the MSCI Emerging Markets Index (with net dividends reinvested) through investment in a concentrated portfolio of 15-25 equity securities of companies in emerging markets, and from other markets where it can be demonstrated by the Investment Advisor that the company concerned is overwhelmingly an emerging market related company. The approach is focussed on valuations and bottom-up fundamental research of individual companies.
Fund particulars
| Launch date | 01 July 2011 |
|---|---|
| Fund size | US$366.7m |
| Domicile | USA |
| Structure | LLC |
| Base currency | USD |
| Dealing | Monthly |
| Min. investment | US$3,000,000 |
| Management fees | 0.90% per annum |
| TER | 1.03% per annum |
| Benchmark | MSCI Emerging Markets |
Portfolio manager
Tom Taylor
Tom Taylor
Tom joined OP in June 2008 from Alta Advisers Ltd. In 1999 he joined Alta Advisers, then headed by Richard Oldfield, and was responsible for managing emerging market equities portfolios. Before this he was an investment analyst at Adam & Co., based in Edinburgh. He graduated from St. Andrews University and Stirling University. He manages the emerging market portfolios and contributes to the overall investment selection.
Latest publications
Latest publications
Emerging Market Equities Strategy
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Commentary
Value investing roundly beat growth investing in the month but continues to be at a significant valuation discount to growth investing for emerging market equities, and we believe well placed to benefit from the ongoing normalisation trade. Unfortunately, vaccination rates in most emerging markets continue to be underwhelming compared to developed markets. China underperformed following tightening measures, intervention against leading Internet players, and angst over US frictions. The weighted average of the price targets in the portfolio shows 40% upside potential.
The bottom performers by contribution for the month were Buenaventura and Turkcell. Buenaventura (Peruvian miner) has precious metals as the largest part of production, and the gold price has trended downwards since the peak in early 2020. Bitcoin looks to have become the favoured alternative currency play for now. We remain favourable towards gold as supply growth remains limited globally and the industry continues to gradually consolidate. Buenaventura has reduced its costs and boosted production to pre-Covid levels following the sharp lock-down experienced in Peru in 2020. Copper is the second largest exposure for the company, and the copper price looks to have plateaued at multi-year highs. Turkcell (Turkish mobile telecom provider) was again impacted by the wider fallout from Turkish economic policy as the President intervened dramatically, rather than by anything company related. Turkcell continues to execute well. The company can price for inflation, has an active currency hedging policy, and is well used to the vagaries of Turkish policy in structuring its balance sheet.
The top performers by contribution for the month were Ternium and SK Telecom.Ternium(Latin American steel producer) is riding the strong rebound in US steel prices since the lows in early 2020, as demand recovery caught the industry off guard, and management cautiously predict that prices will remain stronger for longer. Mexico is well placed as a manufacturing hub exporting into the US market and Mexico remains a net importer of steel, which over time will allow Ternium to expand its efficient operations. SK Telecom (Korean mobile telecommunications provider) is benefiting from the growth of 5G in Korea and the commercialisation of 5G services. The investment it has in SK Hynix (a leading semiconductor manufacturer) gives exposure to the growth of this consolidating industry. Management have moved steadily towards improving shareholder friendliness, as evidenced by a share buyback and the possibility of its investment portfolio of 5G service subsidiaries being split off.
The top performers for the quarter by contribution are Ternium and Embraer (Brazilian aircraft manufacturer); and the bottom performers are Petrobras (Brazilian oil producer) and Buenaventura.
Commentary
Capacity and flows
We are pleased to announce that we are now offering an EM ex China strategy. Alongside this we have increased capacity across both EM and EM ex China to US$1.5bn. If you would like to know more or arrange a meeting please contact clientrelations@oldfieldpartners.com.
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