GLG Asia Pacific (ex Japan) Equity Long-Short
GLG Asia Pacific (ex-Japan) Equity Long-Short is a fundamentals-driven, long-short equity strategy managed by a seasoned investment team. The strategy aims to capture the turning points in earnings revisions where there has historically been significant potential to generate alpha.
- The investment team is led by Andrew Swan who is a highly experienced and established Asian Equity portfolio manager.
- Core elements of the investment strategy have been developed and refined over 20+ years of long-only investing.
- Strategy is centred around bottom-up analysis of company fundamentals, with a focus on relative earnings revision.
- A long-short approach enables the team to fully leverage their process and capitalise on their views of both winners and laggards
- Style and benchmark agnostic approach allows flexibility to shift in/out of styles.
Approach
The strategy employs a fundamentals-driven approach to investing, with the aim of creating a high-conviction portfolio of 50-100 stocks (up to 45 long positions and 45 short positions). The strategy is benchmark agnostic, allowing the team to invest flexibly across the Asia Pacific opportunity set, and with an absolute mindset.
The investment process is centered around relative earnings (EPS) revisions, which has historically been one of the key drivers of alpha in the region. The aim is to capture turning points in companies that have high EPS revision potential over a forecast period of up to 12-18 months1.
The team conduct detailed fundamental analysis and financial modelling on companies across the region to identify candidates with the highest EPS revision potential. The aim of this process is to identify sources of potential surprise (positive or negative) in the company’s key profit drivers such as revenue, costs, margins, cash flows and ultimately earnings per share. These sources of surprise can be derived by many factors including management strategy and operational decision making, competitive dynamics, macro and micro economic factors.
On the long side, the core philosophy of the strategy is to identify the stocks with the best potential to deliver earnings surprises relative to expectations. Within the short book, targeted alpha is generated by shorting companies expected to miss earnings.
In addition to bottom up risk taking, the team will overlay various deliberate and diversified top down macro views in order to generate strong absolute returns throughout the market cycle.
| Approach | Long-short |
| Asset class | Equity |
| Geographic Focus | Asia (ex-Japan) |
| Benchmark | None |
1. Certain risk guidelines and/or limits are provided for information purposes only and represent current internal risk guidelines. There is no requirement that the strategy observes these limits, or that any action be taken if a guideline limit is reached or exceeded. Internal guidelines may be amended at any time without notice.
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Considerations
One should carefully consider the risks associated with investing, whether the strategy suits your investment requirements and whether you have sufficient resources to bear any losses which may result from an investment:
Investment Objective Risk - There is no guarantee that the Strategy will achieve its investment objective.
Market Risk - The Strategy is subject to normal market fluctuations and the risks associated with investing in international securities markets and therefore the value of your investment and the income from it may rise as well as fall and you may not get back the amount originally invested.
Counterparty Risk - The Strategy will be exposed to credit risk on counterparties with which it trades in relation to on-exchange traded instruments such as futures and options and where applicable, ‘over-the- counter’("OTC","non-exchange") transactions. OTC instruments may also be less liquid and are not afforded the same protections that may apply to participants trading instruments on an organised exchange.
Currency Risk - The value of investments designated in another currency may rise and fall due to exchange rate fluctuations. Adverse movements in currency exchange rates may result in a decrease in return and a loss of capital. It may not be possible or practicable to successfully hedge against the currency risk exposure in all circumstances.
Liquidity Risk - The Strategy may make investments or hold trading positions in markets that are volatile and which may become illiquid. Timely and cost efficient sale of trading positions can be impaired by decreased trading volume and/or increased price volatility..
Financial Derivatives - The Strategy will invest financial derivative instruments ("FDI") (instruments whose prices are dependent on one or more underlying asset) to achieve its investment objective. The use of FDI involves additional risks such as high sensitivity to price movements of the asset on which it is based. The extensive use of FDI may significantly multiply the gains or losses.
Leverage - The Strategy's use of FDI may result in increased leverage which may lead to significant losses.
Emerging Markets - The Strategy may invest a significant proportion of its assets in securities with exposure to emerging markets which involve additional risks relating to matters such as the illiquidity of securities and the potentially volatile nature of markets not typically associated with investing in other more established economies or markets.
Single Region/Country Risk - The Strategy is a specialist country-specific Strategy or focuses on a particular geographic region, the investment carries greater risk than a more internationally diversified portfolio.
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