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Equity Investments

Emerging Markets Equity

Philosophy

Our investment philosophy is that markets are inefficient because investors tend to overreact to short term events and cause stock prices to deviate from a company’s underlying business fundamentals. Within emerging markets, DuPont Capital believes that mispricing is even more pronounced as a result of passive money inflows/outflows and lack of adequate information. Our Emerging Markets strategy has achieved consistent risk-adjusted returns by systematically identifying companies that are undervalued relative to their long term earnings power as stock prices generally follow business fundamentals over the long term.


Process

DuPont Capital combines proprietary valuation models with in-depth fundamental research to opportunistically identify the most attractively valued emerging market securities. The valuation models systematically assess profit trends and potential risks to earnings power for the entire investable universe on a daily basis. In-depth fundamental analysis results in proprietary estimates of normalized earnings power, normalized cash flow generation and the sustainable earnings growth rate. Within Emerging Markets, DuPont Capital also evaluates risk at the country level through top down macroeconomic analysis and allocates capital accordingly. This risk-controlled portfolio construction process seeks to avoid uncompensated investment risk and, by maintaining a long-term investment horizon, DuPont Capital believes we can effectively exploit valuation anomalies.