As part of the Financial Keys Investment Committee’s ongoing review of portfolios and the evolving market and economic backdrop, there has been a change to the portfolio.

Whilst the Martin Currie Emerging Markets fund remains a strong well-rounded offering, competitive tension in the peer group and our rising conviction in other strategies has resulted in the sale of this fund from the portfolio. In addition, the fund’s relative performance over the last few years has been below our expectations and in stark contrast to their strong long-term results prior to the COVID period. Some process refinements might be in order here in the absence of market dynamics reverting back to their long-term historical norms.

Pzena Emerging Markets Value is one of our highest conviction picks employing a tried and tested value approach in a market where value investing has worked persistently well over the very long term. The team’s deep insights about generally out of favour or unloved stocks means they can unearth opportunities at a deep discount to their fair value where others aren’t looking.

The strategy identifies opportunities through a research-driven, bottom-up process, adhering to a strict valuation discipline and focusing on companies they believe are priced significantly below their long-term earnings potential. Their investment universe is the 1,500 largest companies in the emerging markets with 40-80 best ideas making their way into the portfolio. The four-portfolio manager team is highly regarded with extensive industry experience, with the 3 most senior members having worked at Pzena for almost 20 years each.

More broadly, it’s worth noting that emerging market equities continue to trade at a significant discount to developed market equities. We continue to expect this discount to reduce over time in favour of emerging market equities. In addition, emerging market equities continue to provide strong diversification benefits to the portfolio from a risk perspective. Utilising the Pzena fund via the Key Managed Models incurs a management fee discount of 0.08%.