• Overview
  • Performance
  • Characteristics
  • Notes
  • Portfolio Managers
  • Literature


Investment Strategy

The Emerging Markets Growth strategy generally invests in companies of all capitalizations based within the emerging markets.

 

Strategy Facts

Inception Date: 1/1/1997
Composite Assets as of 6/30/2017: $2,825 million
Total strategy assets*: $2,825m
Open to New Investors: Yes
Separately Managed Accounts Minimum Initial Investment: $20 million
Investment Vehicles: Separately managed account
Mutual fund

 

*Total strategy assets include all assets managed in the strategy style. Composite assets include those accounts that meet the composite objectives and eligibility requirements. Please click here for descriptions of composite objectives and eligibility requirements.

 

 

 


Performance as of 6/30/2017 | updated quarterly

Composite/Index QTR YTD 1 Year 3 Year 5 Year 10 Year Since Inception*
Emerging Markets Growth Composite (Gross) 8.16% 20.45% 21.11% 2.46% 7.45% 4.76% 13.09%
Emerging Markets Growth Composite (Net) 7.86% 19.77% 19.73% 1.19% 6.02% 3.23% 11.27%
MSCI Emerging Markets Index1 (ND) (Benchmark) 6.27% 18.43% 23.75% 1.07% 3.96% 1.91% *
MSCI Emerging Markets Index1(GD) 6.38% 18.60% 24.17% 1.44% 4.33% 2.25% 6.46%
MSCI Emerging Markets Growth Index2 9.44% 23.45% 25.99% 3.42% 6.18% 2.22% *


 


Sources: Driehaus Capital Management LLC, Morgan Stanley Capital International Inc.

*Inception Date: 1/1/1997

The performance data represents the strategy’s composite of emerging markets growth accounts managed by Driehaus Capital Man­agement LLC (DCM) (the composite). These returns are estimated for the period as all underlying accounts have not yet been reconciled. All rates of return include reinvested dividends and other earnings. Net of fee returns reflect the payment of advisory fees and in some instances, other fees and expenses such as administrative and transfer fees while the gross of fee returns do not. Both are net of brokerage commissions charged to the accounts. The performance data shown above represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted. Please see the notes section for other important information.

The performance results for the Composite are shown in comparison to an index. While the securities comprising the indices are not identical to those in any account in the Composite, the Company believes this may be useful in evaluating performance. Unlike the Composite, the index is not actively managed and does not reflect the deduction of any advisory or other fees and expenses.

1The Morgan Stanley Capital International Emerging Markets Index (MSCI Emerging Markets Index) is a market capitalization-weighted index designed to measure equity market performance in global emerging markets. Data is in US Dollars. The net dividend (ND) index is calculated with net dividend reinvestment. The gross dividend (GD) index is calculated with gross dividend reinvestment. The benchmark has changed from the MSCI Emerging Markets Index (GD) to the MSCI Emerging Markets Index (ND) because the net index is more commonly used industry wide and is a more representative comparison versus the strategy because it is presented net of foreign withholding taxes.

2The Morgan Stanley Capital International Emerging Markets Growth Index (MSCI Emerging Markets Growth Index) is a subset of the MSCI Emerging Markets Index and includes only the MSCI Emerging Markets Index stocks which are categorized as growth stocks. Data is in US Dollars. The net dividend (ND) index is calculated with net dividend reinvestment.

For additional disclosure on the Composite, please click here.

Important MSCI disclosures

 

 


Portfolio Characteristics*

as of 6/30/2017 | updated quarterly
  Strategy Benchmark
Number of Holdings 99 845
Weighted Avg. Market Cap (M) $82,743 $75,995
Median Market Cap (M) $10,629 $6,206
Est. 3-5 Year EPS Growth 16.3% 15.9%
Active Share (3-year avg.)** 81.95 n/a
Market Cap Breakout
< $5 billion 11.4% 11.4%
$5 - $15 billion 23.8% 28.6%
> $15 billion 64.8% 60.0%
Risk-adjusted and Risk Characteristics (3-year period)
Annualized Alpha 1.49 n/a
Sharpe Ratio 0.17 0.05
Information Ratio 0.25 n/a
Beta 0.77 1.00
Standard Deviation 12.97 16.06
Tracking Error 5.46 0.00
R Squared 0.91 1.00

 

Sector Weightings

as of 6/30/2017 | updated quarterly
  Strategy Benchmark
Consumer Discretionary 8.0% 8.6%
Consumer Staples 8.9% 6.7%
Energy 2.8% 6.5%
Financials 27.4% 23.8%
Health Care 2.7% 2.4%
Industrials 4.4% 5.7%
Information Technology 29.4% 28.4%
Materials 4.4% 7.2%
Real Estate 2.1% 2.7%
Telecommunication Services 2.2% 5.4%
Utilities 1.8% 2.6%
Cash 5.9% 0.0%

 

Country Weightings

as of 6/30/2017 | updated quarterly
  Strategy Benchmark
Argentina 1.5% 0.0%
Brazil 7.7% 6.6%
China/Hong Kong 22.2% 27.7%
Czech Republic 0.4% 0.2%
Egypt 0.3% 0.1%
Greece 0.9% 0.4%
Hungary 0.7% 0.3%
India 13.3% 8.8%
Indonesia 2.4% 2.5%
Kazakhstan 0.5% 0.0%
Malaysia 1.0% 2.4%
Mexico 3.7% 3.7%
Peru 1.2% 0.3%
Philippines 0.8% 1.2%
Russia 4.1% 3.2%
South Africa 3.4% 6.2%
South Korea 8.3% 15.6%
Taiwan 9.9% 12.5%
Thailand 2.5% 2.2%
Turkey 1.3% 1.2%
United Arab Emirates 1.9% 0.7%
Other*** 6.1% 0.7%
Cash 5.9% 0.0%

 

Top 5 Holdings****

as of 6/30/2017 | updated monthly
1. Alibaba Group Holding Ltd. Sponsored ADR 5.5%
2. Samsung Electronics Co., Ltd. 3.5%
3. HDFC Bank Limited Sponsored ADR 3.1%
4. Tencent Holdings Ltd. 3.1%
5. Sberbank Russia OJSC Sponsored ADR 2.9%

 

 

 


Sources: Driehaus Capital Management LLC, Factset Research Systems, Inc., eVestment Alliance
Benchmark: MSCI Emerging Markets Index
*Portfolio characteristics represent the strategy’s composite
**Data is calculated monthly.
***Represents companies domiciled in developed countries that have significant emerging markets exposures.
****Holdings subject to change.

TERMS: Active share represents the share of portfolio holdings that differ from the benchmark index holdings. Average drawdown is the arithmetic average of declines in value during a given period of time. Downside risk is a measure of the average deviations of a negative return series. A large downside risk implies that there have been large swings or volatility in the manager’s return series. Beta is a measure of a portfolio’s volatility. A beta of 1.00 implies perfect historical correlation of movement with the market. A higher beta manager will rise and fall more rapidly than the market, whereas a lower beta manager will rise and fall slower. Standard deviation is a measure of the average deviations of a return series from its mean; often used as a measure of portfolio volatility. A large standard deviation implies that there have been large swings or volatility in the manager’s return series. Tracking error measures of the amount of active risk that is being taken by a manager. Tracking error accounts for the deviation away from the benchmark and does not indicate in which direction it occurred, either positive or negative. Alpha is the measure of performance on a risk-adjusted basis. Alpha takes the volatility (price risk) of a mutual fund and compares its risk-adjusted performance to a benchmark index. The excess return of the fund relative to the return of the benchmark index is a fund’s alpha. Sharpe ratio is calculated by finding the portfolio’s excess return and then dividing by the portfolio’s standard deviation. Information Ratio (IR) measures a portfolio manager’s ability to generate excess returns relative to a benchmark, but also attempts to identify the consistency of the investor. This ratio will identify if a manager has beaten the benchmark by a lot in a few months or a little every month. The higher the IR the more consistent a manager is and consistency is an ideal trait. R-Squared is a statistical measure that represents the percentage of a fund or security’s movements that can be explained by movements in a benchmark index. For fixed-income securities, the benchmark is the T-bill. For equities, the benchmark is the S&P 500.

For additional disclosure on the Composite, please click here.

 


Composite Notes

Driehaus Capital Management LLC (DCM) is a registered investment adviser with the United States Securities and Exchange Commission (SEC). DCM provides investment advisory services using growth equity strategies to individuals, organizations, and institutions. The firm consists of all accounts managed by DCM (the Company). Prior to October 1, 2006, the firm included all accounts for which Driehaus Capital Management (USVI) LLC (DCM USVI) acted as investment adviser. On September 29, 2006, DCM USVI ceased conducting its investment advisory business and withdrew its registration as a registered investment adviser with the SEC. Effective September 30, 2006, DCM USVI retained DCM as investment adviser to these portfolios.

DCM claims compliance with the Global Investment Performance Standards (GIPS®).

This performance information is estimated for the period as not all underlying accounts have yet been reconciled. All rates of return include reinvested dividends and other earnings. Net of fee returns reflect the payment of advisory fees and in some instances, other fees and expenses such as administrative and transfer fees while the gross of fee returns do not. Both are net of brokerage commissions charged to the accounts. The performance data shown represents past performance and does not guarantee future results. Current performance may be lower or higher than the performance data quoted.

COMPOSITE OBJECTIVES AND ACCOUNTS ELIGIBLE FOR THE EMERGING MARKETS GROWTH COMPOSITE
The Emerging Markets Growth Composite (the Composite) presented includes all unleveraged "emerging markets growth accounts" over which the Company exercises discretionary investment authority of both cash and equities using the same investment objective and philosophy. The Composite was created in January 1997.

An account is considered to be an emerging markets growth account if it seeks capital appreciation by investing primarily in equity securities of rapidly growing companies in emerging markets countries around the world. This strategy may invest substantially all (no less than 80%) of its assets in emerging markets companies.

Once an account has met the above criteria and is fully invested, it is included in the Composite in the next full monthly reporting period. Accounts that change investment strategies are transferred between composites in the first full monthly reporting period in which the account is managed under the new style. Terminated accounts are excluded from the Composite in the first month in which they are not fully invested as of the end of the month.


Photo of Howard Schwab

Howard Schwab

Lead Portfolio Manager

Howard Schwab is the lead portfolio manager for the Emerging Markets Growth strategy and a portfolio manager for the Emerging Markets Small Cap Growth and Multi-Asset Growth Economies strategies. In his role as lead portfolio manager, he has final responsibility for the strategy’s portfolio construction, risk management and buy/sell decisions. In his role as portfolio manager, he is responsible for idea generation, portfolio construction, security selection and investment research. He is also involved in analyzing macro-level trends and associated market risks. Mr. Schwab has been quoted in numerous financial outlets, including the Wall Street Journal, Morningstar.com and Smart Money. He has also appeared as a guest contributor on Bloomberg TV.

Mr. Schwab joined Driehaus Capital Management in 2001. During his tenure with Driehaus, in ad­dition to the responsibilities referenced above, Mr. Schwab was also the co-portfolio manager for the Driehaus Global Growth strategy from 2008 through 2010, and co-portfolio manager for the Driehaus International Small Cap Growth strategy from 2002 through 2014. He received his B.A. in economics from Denison University in 2001.


Photo of Chad Cleaver

Chad Cleaver, CFA

Portfolio Manager

Chad Cleaver is the lead portfolio manager for the Emerging Markets Small Cap Growth and Frontier Markets strategies and a portfolio manager for the Emerging Markets Growth and Multi-Asset Growth Economies strategies. In his role as lead portfolio manager, he has final responsibility for the strategy’s portfolio construc­tion, risk management and buy/sell decisions. In his role as portfolio manager, he is responsible for idea generation, portfolio construction, security selection and investment research. He is also involved in daily tracking of the portfolio performance as well as macro-level trends and the market environment.

Mr. Cleaver began his career with the Board of Governors of the Federal Reserve System and joined Driehaus Capital Management in 2004. He received his A.B. in economics from Wabash College in 2000 and his MBA from the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill in 2004. Mr. Cleaver is a CFA charterholder.


Photo of Chad Cleaver

Richard Thies

Portfolio Manager

Richard Thies is the lead portfolio manager on the Driehaus Multi-Asset Growth Economies strategy and a portfolio manager for the Driehaus Emerging Markets Growth, Driehaus Emerging Markets Small Cap Growth and Driehaus Frontier Markets strategies. In this role, he is re­sponsible for idea generation, portfolio construction, security selection and investment research. Additionally, Mr. Thies provides comprehensive macroeconomic analysis to the firm’s investment management and research department, incorporating data releases, market expectations and government actions into forecasts for currencies, interest rates, sectors and market movements. Also, at the request of portfolio managers and analysts, he provides in-depth analysis of specific events and potential scenarios at the region, country and sector levels.

Prior to joining Driehaus Capital Management in 2011 as a macro analyst, Mr. Thies worked as an associate international economist covering emerging markets at The Northern Trust. During his time at The Northern Trust, Mr. Thies performed economic analysis, interest rate forecasts and country risk assessments for both internal and external use. In advance of his time at The Northern Trust, Richard worked in microfinance banking in sub-Saharan Africa with both the International Finance Corporation of the World Bank Group and Opportunity International. Mr. Thies received his Bachelor of Arts in international studies from Emory University in 2005 and his Master of Arts degree focused in international political economy from the University of Chicago in 2007.