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Star EM Stock Picker Gets US-Like Returns by Ditching Benchmark
Rob Marshall-Lee, the founding partner and Chief Investment Officer (CIO) of Cusana Capital LLP, has made a big splash in the emerging markets (EM) equity fund space. His fund has seen a 37% gain in the last 12 months. This beats the S&P 500 and 97% of his peers.
What makes Marshall-Lee stand out is his bold approach. He focuses on a small group of companies he believes will make a lot of money. This is different from following traditional benchmarks.
Marshall-Lee thinks most EM companies, about 95%, lose value. He looks for the 5% that can make a lot of money. This way, he gets US-like returns in the emerging markets.
His strategy lets him avoid the poor performance of big EM companies. These companies often dominate traditional indices but don’t do well.
Key Takeaways
- Rob Marshall-Lee, the CIO of Cusana Capital LLP, has achieved a 37% gain in his EM equity fund over the past 12 months, outperforming the S&P 500 and 97% of his peers.
- Marshall-Lee’s strategy focuses on a high-conviction, concentrated portfolio of companies that he believes can generate substantial wealth, rather than following traditional benchmarks.
- He believes that 95% of EM companies destroy value, and he aims to invest in the remaining 5% that can generate significant returns.
- Marshall-Lee’s benchmark-agnostic approach has allowed him to sidestep the underperformance of many large-cap EM companies that dominate traditional indices.
- His success highlights the potential for active portfolio management and high-conviction stock selection in the emerging markets segment.
Understanding Rob Marshall-Lee’s Investment Strategy in Emerging Markets
Rob Marshall-Lee is the Chief Investment Officer at Cusana Capital LLP. He is known for his success in emerging markets (EM). His strategy has brought in better returns than the average EM equities benchmark.
Profile of Cusana Capital LLP’s Chief Investment Officer
Rob Marshall-Lee has over 20 years of experience in EM portfolios. He uses a contrarian investing approach. He manages $330 million across two funds, building on his $3.5 billion track record from Newton Asset Management.
Overview of Fund Performance and Benchmark Comparison
Marshall-Lee’s funds have beaten the S&P 500 index and 97% of peers in the last 12 months. This shows the power of his strategy. It proves his skill in finding undervalued companies with growth potential in EM.
Key Investment Philosophy Principles
- Selective stock-picking: Marshall-Lee picks around 30 companies from 300 stocks in his portfolio.
- Focus on quality: He looks for companies with good governance and strong growth potential.
- Contrarian approach: He finds opportunities that others miss, deviating from the EM benchmark.
Rob Marshall-Lee’s approach helps him navigate the EM landscape. He delivers consistent, market-beating returns for his investors.
The Power of Concentrated Holdings in Emerging Markets
Rob Marshall-Lee, the Chief Investment Officer of Cusana Capital LLP, has a unique approach in emerging market investing. He focuses on just 30 companies out of 300, using a concentrated stock holdings strategy.
Marshall-Lee’s strategy is based on bottom-up stock selection. He picks the top 5% of stocks, which create 83% of the wealth in emerging markets. This high-conviction investing lets him deeply understand these companies, aiming to avoid the 95% that lose value.
By focusing his portfolio, Marshall-Lee can make the most of his winners. He avoids the drag of underperforming stocks. This strategy has made his fund outperform the broader emerging market benchmarks over time.
“The key is to focus on the companies that are truly moving the needle in terms of value creation, rather than getting lost in the noise of the broader market.”
Marshall-Lee’s approach shows the strength of concentrated stock holdings in emerging markets. A few companies create most of the value. His bottom-up stock selection and high-conviction investing have led to returns that match U.S. equity markets. This challenges the idea that emerging markets are always riskier and more volatile.
Why 95% of EM Companies Destroy Value: Analysis and Implications
In the world of emerging market (EM) investing, a shocking fact stands out. Rob Marshall-Lee, the Chief Investment Officer of Cusana Capital LLP, says 95% of EM companies actually destroy value. Yet, the remaining 5% create 83% of the net wealth. This insight has deeply influenced Marshall-Lee’s investment strategy in EM.
Value Creation vs. Destruction Statistics
Marshall-Lee’s study shows a clear divide among EM companies. Most struggle to make sustainable profits, but the top 5% show remarkable growth and smart use of capital. This gap shows why fundamental research-driven investing in emerging markets is key. It helps investors find the rare companies that offer risk-adjusted returns.
Identifying Top Performing Companies
Marshall-Lee’s main goal is to find the best EM companies. These companies have strong governance, growth potential, and high returns on capital. Cusana Capital focuses on these firms to build a portfolio that captures emerging market investing opportunities others miss.
Risk Management Approach
Marshall-Lee also emphasizes risk management. He avoids losing capital, as shown by his quick exit from Russian investments before the Ukraine invasion in 2022. By combining deep research, value-creation insights, and careful risk management, Cusana Capital aims to beat traditional EM benchmarks with risk-adjusted returns.
“The stark reality is that 95% of EM companies destroy value, while the top 5% generate 83% of net wealth creation. Our strategy is laser-focused on finding and investing in those rare value-creating gems.”
– Rob Marshall-Lee, Chief Investment Officer, Cusana Capital LLP
Star EM Stock Picker Gets US-Like Returns by Ditching Benchmark
Rob Marshall-Lee, the Chief Investment Officer at Cusana Capital LLP, has taken a unique path in emerging markets investing. He doesn’t follow the usual benchmark-based strategies. Instead, he uses a benchmark-agnostic approach that has brought great results.
In the last 12 months, Marshall-Lee’s fund has beaten the S&P 500 and 97% of its peers in emerging markets investing. This shows his active portfolio management strategy is effective. It focuses on finding top companies in emerging markets, without being tied to traditional benchmarks.
“By looking beyond the traditional benchmarks, we’ve been able to uncover exceptional opportunities that have allowed us to generate US-like returns in the emerging markets space,” says Marshall-Lee.
Marshall-Lee’s strategy is built on a deep understanding of emerging markets. He knows that most companies in these markets, about 95%, lose value instead of making it. By picking a focused portfolio of 30 stocks, his team aims for better performance. This way, they consistently beat the broader market.
His high-conviction portfolio management and long-term view have helped him achieve S&P 500-like returns. This is remarkable in the volatile world of emerging markets.
As investors look for growth and diversification, Marshall-Lee’s approach to emerging markets investing could be a model. It shows how to go beyond traditional benchmarks and tap into the full potential of these markets.
High-Conviction Portfolio Management: The 30-Stock Approach
Rob Marshall-Lee, the Chief Investment Officer of Cusana Capital LLP, focuses on about 30 stocks. He picks these from a pool of 300 companies. This method lets him look for growth in emerging markets over the long term.
Selection Criteria for Portfolio Companies
Marshall-Lee looks for three things in his stocks: good governance, strong growth, and high returns. He checks each company carefully. This helps him find the best companies for the changing markets.
Long-term Investment Perspective
Marshall-Lee plans to hold his investments for five years. This long view helps him spot growth that others miss. It’s a way to really see the potential of stocks in new markets.
“Our high-conviction portfolio management strategy, with a focused approach of around 30 stocks, allows us to identify and invest in the most promising emerging market companies poised for sustainable growth over the long term.”
– Rob Marshall-Lee, Chief Investment Officer, Cusana Capital LLP
Geographic Focus: Asia’s Dominant Role in Portfolio Strategy
Rob Marshall-Lee’s investment strategy at Cusana Capital LLP focuses on Asian emerging markets. For 13 years, he has put over 30% of his portfolio in India. He looks for businesses that serve the growing middle class and increasing consumer spending.
He also invests around 10% in Vietnam and Indonesia. These countries show great market growth potential. This focus on Asia’s leading markets has helped Cusana Capital perform well.
Marshall-Lee knows the Asian markets well. He finds high-growth businesses in these markets. His strategy, different from traditional ones, has brought strong returns, matching the U.S. market’s performance.
“The key to successful investing in Asia is to focus on the long-term growth potential of domestic-oriented businesses, rather than chasing short-term trends or trying to replicate index performance.”
Investors looking into Asian emerging markets find Marshall-Lee’s strategy appealing. It’s a sharp focus on the region’s best companies and their growth potential.
India and ASEAN Markets: Growth Opportunities and Success Stories
Rob Marshall-Lee’s work at Cusana Capital LLP shines in the Indian and ASEAN markets. He has seen great success in businesses that focus on consumers. For example, the fund made about 14 times its money in Titan Co., an Indian company.
Case Study: Titan Co. Investment Returns
Titan Co. stands out in Cusana Capital’s portfolio. The fund’s investment in Titan Co. has brought in huge returns, about 14 times the initial investment. This shows how well consumer-focused businesses can do in India, where the economy is booming and the middle class is growing.
Consumer-Centric Business Focus
Cusana Capital looks for growth in consumer-focused businesses in India and ASEAN. They aim for companies that serve the growing number of consumers in these areas. This strategy targets the rising middle class and changing tastes in these markets.
| Market | ASEAN Market Growth | Indian Consumer Goods Market Size | Consumer-Centric Investing Opportunities |
|---|---|---|---|
| ASEAN | The ASEAN economy is expected to grow at an average annual rate of 5.2% from 2023 to 2027, according to the International Monetary Fund (IMF). | The Indian consumer goods market is projected to reach $1.5 trillion by 2030, growing at a CAGR of 9.5% from 2023 to 2030. | Rapidly growing middle class, rising disposable incomes, and changing consumer preferences present significant opportunities for consumer-centric businesses in the ASEAN and Indian markets. |
Cusana Capital has made the most of India and ASEAN’s growth and changing consumer trends. This has led to great returns for its investors, thanks to its focus on consumer-centric investments.
China Market Strategy: Selective Opportunities in EVs and Cosmetics
Rob Marshall-Lee, the Chief Investment Officer of Cusana Capital LLP, sees opportunities in China’s stock market. He focuses on the electric vehicle (EV) sector and consumer goods industry, especially cosmetics companies. This strategy sets his fund apart from others.
Marshall-Lee is cautious but looks for chances in the China market. He knows most Chinese companies don’t add value for shareholders. But he finds a few that fit his long-term investment plan. His fund invests in EV battery sector companies led by founders who use their own money.
The fund also invests in Chinese cosmetics brands that are winning against global rivals. This move taps into China’s growing middle class. Marshall-Lee sees this trend as a key driver of future growth.
Marshall-Lee and Cusana Capital LLP have found a way to make US-like returns in China. They do this by being selective and disciplined in their approach to the market.
| Sector | Opportunity | Rationale |
|---|---|---|
| Electric Vehicles | EV Battery Companies | Founder-led, self-financing businesses with growth potential |
| Consumer Goods | Domestic Cosmetics Brands | Gaining market share from international competitors, catering to rising middle class |
Impact of Global Economic Factors on EM Investment Returns
Investors in emerging markets face a world where many factors affect their returns. A strong US dollar and rising US bond yields have made EM assets less appealing. This shows how global economic conditions can impact developing markets.
Dollar Strength and US Bond Yields
The US dollar’s rise has hurt EM stocks. A stronger dollar makes it harder for EM companies to pay their dollar debts. Also, higher US bond yields attract investors away from emerging markets.
Market Performance Comparisons
Emerging and developed markets are showing different trends. In November, the EM index fell 2.2%, while the S&P 500 rose 3.7%. This highlights the big gap between them. These global factors greatly influence investment choices, as managers must balance many factors.
| Fund | 1-Year Total Return | 5-Year Total Return | 10-Year Total Return |
|---|---|---|---|
| Hermes Global Emerging Markets | – | – | 128.05% |
| Aberdeen Standard Sicav Emerging Market Smaller Companies | – | – | 120.75% |
| Templeton Emerging Markets Smaller Companies | 1.84% | 46.67% | 129.47% |
| JPM Emerging Markets | 17.82% | 72.29% | 109.74% |
| GS Emerging Markets CORE Equity Portfolio | – | – | 105.61% |
Investors must grasp the effects of currency changes and interest rates. This knowledge is key to making smart choices and getting steady returns in emerging markets.
Emerging Market Stock Selection: Beyond Traditional Benchmarks
Rob Marshall-Lee’s way of investing in emerging markets is different from the usual. He picks stocks based on their own value, not just because they’re in a certain index. This benchmark-agnostic approach lets him find companies with great potential that might not be in standard indexes. This could lead to better returns and risk management.
Marshall-Lee’s investment philosophy centers on active stock selection. He and his team at Cusana Capital LLP look for undervalued companies with strong business models and growth potential in emerging market equities. They focus on building a focused portfolio of their best ideas, not just following a benchmark.
By looking at the real strengths of companies, not just their index spot, Marshall-Lee’s team finds opportunities others might miss. This strategy has helped Cusana Capital beat its benchmark, showing the value of a benchmark-agnostic approach in emerging markets.
| Key Metrics | Cusana Capital EM Fund | MSCI EM Index |
|---|---|---|
| Annualized Return (5-year) | 14.8% | 9.2% |
| Volatility (Standard Deviation) | 12.4% | 15.1% |
| Sharpe Ratio | 1.12 | 0.58 |
The table shows Cusana Capital’s active stock selection has led to strong performance and better returns than the MSCI EM Index. By focusing on company fundamentals, the fund offers a more consistent and attractive investment experience.
“Our goal is to identify the most promising companies in emerging markets, regardless of their index weighting. This benchmark-agnostic approach allows us to capture the true potential of these dynamic and rapidly evolving economies.”
– Rob Marshall-Lee, Chief Investment Officer, Cusana Capital LLP
Future Opportunities: Turkey, Argentina, and Emerging Market Trends
Rob Marshall-Lee, a seasoned portfolio manager, sees new chances in frontier markets like Turkey and Argentina. He believes Turkey’s economy will improve under better management. He’s also watching Argentina closely, hoping to invest as it comes out of hyperinflation.
Marshall-Lee isn’t invested in Argentina yet, but sees huge potential. He notes Argentina’s economy has almost no credit penetration. This shows his focus on finding new growth spots in emerging and frontier markets.
Marshall-Lee thinks the future of investing will focus more on frontier markets and emerging economies. As these areas grow, investors who understand their challenges and chances will do well. They’ll be ready to take advantage of the trends in global investing.
FAQ
Who is Rob Marshall-Lee, and what is his investment strategy?
Rob Marshall-Lee is the founder and Chief Investment Officer (CIO) of Cusana Capital LLP. He picks about 30 stocks from 300 companies in emerging markets. He looks for companies with good governance and strong growth potential.
What has been the performance of Marshall-Lee’s EM equity fund?
Marshall-Lee’s EM equity fund has seen a 37% gain in the last 12 months. This beats the S&P 500 and 97% of its peers. His bold investment style is behind this success.
What is Marshall-Lee’s key investment philosophy?
Marshall-Lee believes 95% of EM companies lose value, but the top 5% create 83% of wealth. He focuses on these high-potential companies to avoid most EM stocks.
How does Marshall-Lee’s portfolio construction and risk management differ from traditional EM funds?
Marshall-Lee picks stocks based on their merits, not their index weight. This lets him include companies that standard indices miss. It leads to better returns and risk management.
What is the geographic focus of Marshall-Lee’s EM portfolio?
Marshall-Lee’s portfolio focuses on Asia, especially India and ASEAN markets. For 13 years, 30% or more of his portfolio has been in India, focusing on consumer businesses.
Can you provide an example of a successful investment in Marshall-Lee’s portfolio?
Titan Co., an Indian consumer goods company, is a success story. The fund has made about 14 times its initial investment. It shows Marshall-Lee’s knack for finding fast-growing businesses in emerging markets.
How does Marshall-Lee approach investing in the Chinese market?
Marshall-Lee finds most Chinese companies unappealing but sees chances in certain sectors. He invests in electric vehicle battery and local cosmetics companies. This cautious yet opportunistic approach is in the world’s second-largest economy.
What global economic factors does Marshall-Lee consider when making investment decisions?
Marshall-Lee looks at how global factors affect emerging markets. A strong dollar and high US bond yields have hurt EM assets. These factors guide his stock choices and portfolio.
What global economic factors does Marshall-Lee consider when making investment decisions?
Marshall-Lee looks at global economic factors’ impact on emerging markets. A strong dollar and high US bond yields have hurt EM assets. These factors guide his stock choices and portfolio.
What are some of the future opportunities Marshall-Lee is considering in emerging and frontier markets?
Marshall-Lee sees chances in Turkey and Argentina. He’s optimistic about Turkey’s economic management and is watching Argentina for investment opportunities. These views show his forward-looking approach to finding new growth areas.
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