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Mutations, it would seem, are not unique to the virus. Starting with some housekeeping, we always end our letters seeking feedback from our regular readers.

Since our last update, global markets have not been short of action and the manic behaviour characterising today’s markets has taken investors on another rollercoaster ride.

The year 2023 turned out to be fairly pedestrian in terms of emerging markets’ performance. The asset class was weighed down by China, which recorded its third consecutive year of negative returns.

In almost every meeting that we have with management teams, we will ask about incentivisation. In our view, it is an important question and the answer can be highly revealing about an organisation’s culture and behaviour.

As long-term, bottom-up investors, our starting point for finding suitable investments is to seek out companies that benefit from structural tailwinds and have clearly-defined competitive advantages.

Since we last wrote, roughly three months ago, investors in emerging markets have had to reconcile themselves to a stream of disappointing headlines from several key countries. We are often asked about our own views on politics and macroeconomics, and how we incorporate them into our investment process.

Albert Einstein famously said, “Not everything that can be counted counts and not everything that counts can be counted.” This holds true in many situations, but we think it is especially true when it comes to risk management.

I started my career more than 18 years ago as a developed markets consumer analyst. It was a great introduction to investing – the consumer sector is extremely broad so I was able to gain experience across many sub-industries and look at a wide variety of companies.

Over the past few years, global emerging market (GEM) investors have dealt with a series of challenges, including a surging pandemic, local lockdowns and widespread travel restrictions. Now, an escalating conflict between Russia and Ukraine has raised fears that this could spill over into Europe and beyond.

Investment management is an industry where in the short run there is usually little relationship between process and outcome. In the long run, however, the link is very strong.

Penetration rates for goods and services are low and the high level of informality in emerging market countries often raises the barriers to entry substantially.

At its core, our investment philosophy endeavors to identify quality management teams that run businesses able to compound earnings or free-cash flows at attractive rates for long periods of time.

Read the latest news and investment insights from FSSAIM's leading investment experts. We're specialists in APAC and Global Emerging Markets investments.

Learn about investing in emerging market equities with FSSAIM today. Access global opportunities and sustainable, long term growth with our specialist EM fund strategies.

In the FSSA GEM Focus strategy we own high-quality businesses which have competitive advantages such as strong brands, distribution advantages, cost leadership, or simply providing a service/product that customers cannot live without. Historically, this has given them pricing power and the ability to preserve margins despite adverse headwinds.

Rasmus Nemmoe, Portfolio Manager at FSSA Investment Managers manages the FSSA Global Emerging Markets strategies and looks back on 2021 in the video below.

As investors focused on quality, one can easily “fall in love” with an investment and be too forgiving in certain situations, potentially missing important warning signs or sell signals. One question that we frequently get relates to a common behavioural bias for quality investors: how do we balance admiration for a company without becoming too complacent?

One of the true competitive advantages we believe we have at FSSA is a genuine long-term investment horizon. For us, investing is not about trying to predict which stocks will rise or fall next month or quarter; rather, it is a non-speculative activity aimed at participating in the long-term value creation we believe the best companies can generate.

FSSA Investment Managers has been investing in Asia and global emerging markets for three decades. We are conservative investors, and resilience during market sell-offs has underpinned our long-term performance.

Discover our range of APAC & Emerging Markets (EM) funds today. FSSAIM are investment specialists for China, India, Japan and emerging market equities.

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At FSSA, we are long-term, bottom-up investors with a focus on quality. This mind-set also applies to how we engage with companies on Environmental, Social and Governance (ESG) matters.

At FSSA, we are long-term, bottom-up investors with a focus on quality. This mind-set also applies to how we engage with companies on Environmental, Social and Governance (ESG) matters.

At FSSA Investment Managers we seek to invest in quality companies and hold them for the long term. To us, “quality” and “ESG” are synonymous; therefore, we have embedded ESG analysis within the team and have integrated it into our fundamental company research.

Uncover the untapped potential of Asian markets and emerging economies, as the article explores rebound opportunities and strategic moves in the FSSA Asian Growth Strategy portfolio.