- Our investment philosophy reflects our understanding that equity markets are both inefficient and risky.
- We believe that inefficiencies are greatest at the stock level and that over the long term, stock selection by active fund managers can add value in all equity asset classes.
- Attractive risk-adjusted returns can be achieved through a disciplined, bottom-up, stock selection process and a differentiated, risk-aware, portfolio construction process.
- Barings’ equity investment style is Growth at a Reasonable Price (GARP). We seek to identify companies which we believe are mispriced on a longer term basis, based on our understanding of management strategy and the potential for the company to improve returns and grow earnings.
- We value companies on a long term-term basis, utilizing proprietary valuation models that incorporate ESG analysis and macro considerations.
Our Value Add
- Our Depth of Resources: We have a diversified global team of 50+ investment professionals, producing proprietary and differentiated company research, which drives our stock selection.
- Our Focus on a Five-Year Research Horizon: Our research horizon is five years. We believe the market inefficiency is more pronounced over this time horizon, allowing us to readily identify companies with unrecognized growth potential.
- Barings Cost of Equity: We capture and quantify both systematic and idiosyncratic risk via Barings’ proprietary Cost of Equity (COE). We incorporate these economic- and stock-specific potential risks into our valuation of equities and setting of price targets.
- Unique and Quantifiable Integration of ESG: We strongly believe that ESG analysis helps to identify risks that are not typically captured through traditional financial analysis. As a result, we have fully embedded ESG into our investment process, and by doing so, ESG has an influence on both our qualitative assessment and final Barings Cost of Equity of a company.
- Our Proprietary Portfolio Construction Tools: We believe the key to delivering high risk-adjusted returns is through company stock selection and robust risk management. We achieve this through the use of our proprietary, in-house portfolio construction tools.
Michael Simpson, CFA