Mondrian Emerging Markets Equity Fund

Fund Facts as of September 30, 2018

Ticker LEMNX
Net Expense Ratio* 0.92%
Gross Expense Ratio 0.99%
Sales Charge None
Inception Date 11/02/2007
Benchmark MSCI Emerging Markets
Minimum Initial Investment $1 million
Minimum Subsequent Investment $100
CUSIP 36381Y207

The Fund was previously the Laudus Mondrian Emerging Markets Fund and was reorganized into the Mondrian Emerging Markets Equity Fund effective September 24, 2018. The Fund continues to be managed in the same way.

*Effective September 24, 2018, Mondrian Investment Partners Limited (the “Advisor”) has contractually agreed to waive fees and reimburse expenses to the extent necessary to keep Total Annual Fund Operating Expenses (excluding interest, taxes, brokerage commissions, acquired fund fees and expenses and non-routine expenses from exceeding 0.92% of the Fund’s average daily net assets until February 28, 2021.

Show More

Fund News

London, UK, September 2018 – Mondrian Investment Partners Limited announced the reorganizations of the Laudus Mondrian International Equity Fund (LIEIX), Laudus Mondrian Emerging Markets Fund (LEMNX) and the Laudus Mondrian International Government Fixed Income Fund (LIFNX) effective September 24, 2018.

With all three reorganizations, Mondrian transitioned from the sub-advisor to the advisor and will continue to apply Mondrian’s value investment philosophy, methodology and portfolio management process to each Fund.

Read more.

Fund Features

Universe of Securities

Mondrian initially screens a universe for securities with market capitalizations of approximately $3.5 billion at the inception of the position, equating to over 500 companies and roughly 90% of the MSCI EM Index by aggregate market capitalization.

All countries in the MSCI EM index are considered, but we are not restricted to the markets or stocks in the benchmark index. In addition, any company that has greater than 50% of its profits, assets or revenues generated from an emerging market would be a candidate for inclusion.

Security Selection

Security selection is the most important part of Mondrian’s equity investment process. Mondrian uses the same dividend discount valuation model of future income streams across all markets, securities and industries. Securities which are significantly mispriced relative to the dividend discount valuation are purchase and sale candidates.

Key to the security selection process is fundamental company analysis and a regular program of meeting with companies. Meeting with the management of holdings is important to the investment process. The firm uses forward looking valuations, and therefore, the business plans and projections for a company’s future are extremely important.

Country Selection

Tied to the security selection is a top-down country allocation overlay that helps to structure the portfolio. Markets are analysed by the relevant regional specialist who uses an aggregated dividend discount model to assess each market’s real return potential. This analysis is combined with shorter term political and monetary considerations to assist the Emerging Markets Equity team in screening for potential ideas and to guide them in building the portfolio’s country allocations. These allocations can vary substantially from the index.

Sector/Industry Selection

Sector and industry selection forms a secondary part of the Fund’s portfolio construction process. Levels of all allocations to sectors are monitored to ensure prudent diversification. Sector allocations can vary substantially from the index.

Currency Selection

We believe in the long-term, currencies adjust back to their long-term purchasing power parity value relative to base currency. Over the short-term, currencies can fluctuate significantly around this value. Consequently, Mondrian may defensively hedge a foreign currency back to the base currency if we feel that currency is materially overvalued.

In practice, emerging markets equity currency hedging is often too expensive or not an available tool. Nevertheless, Mondrian may be able to employ indirect hedging of a vulnerable currency through individual stock investments. If a company earns a significant portion of its revenues in one currency, for example, and its costs are based in a currency that is expected to decline, its earnings would be positively geared to the falling domestic currency, rising even in base currency terms. This “natural hedge” characteristic in many emerging market stocks, compared to stocks in developed markets, helps to compensate for the difficulty in hedging.

Market Cap

We initially screen the Emerging Markets universe for securities with market capitalizations of approximately $3.5 billion at the inception of the position.

The MSCI Emerging Markets Index is a free float-adjusted market capitalization weighted index that is designed to measure equity market performance in the global emerging markets. This series approximates the minimum possible dividend reinvestment. The returns are calculated applying dividend withholding rates applicable to non-resident persons who do not benefit from double taxation treaties.

Show More