Aberdeen Emerging Capital takes a long term view on asset allocation and, where a high degree of conviction exists, positions its portfolios very differently to mainstream emerging and frontier market benchmark indices.
The asset allocation of our portfolios is driven by a combination of the internal view of the management team and the views of the underlying managers that we work closely with. We believe that, as local experts, those best of breed managers with whom we invest can add significant value in this respect. The internal view is built around a framework of Quality (health of sovereign and corporate balance sheets, corporate governance standards, current account surplus/deficit), Value (trailing and forecast price to earnings ratios, price to book ratios, earnings yield, dividend yield), Growth (GDP growth, corporate earnings growth) and Change (financial, political, social, earnings revisions, price momentum). This framework enables us to compare dissimilar markets using common metrics. The extensive travel undertaken by the team within emerging and frontier markets is a key source of anecdotal information. Finally, we use a quantitative model as a check against our overall positioning. The model ranks countries based on similar factors to those monitored internally.