HEAD-TO-HEAD: Pinebridge vs Templeton

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Investment Strategy

Belonging to the category of emerging market equity funds, both Pinebridge and Templeton products take the MSCI Emerging Markets Index as the benchmark. However, they largely differ in terms of stock selection process.

The investment process of the Pinebridge product is based on analysis of the lifecycle of an investible company, according to Ng.

Pinebridge’s team uses a framework with six categories (see chart below). The team believes each company will go through a typical growth pattern in the early stages. (Mature companies are separated into three categories).

The managers evaluate a company based on valuation expectations during their growth stages.

“The organised process can lead to a more blended allocation, which does not bias toward growth or value stocks. The team makes active bets and invests for the long term,” Ng said.

Pinebridge’s company life cycle analysis

Source: Pinebridge Investments

Turning to the Templeton fund, the manager uses a value investing approach. However, the portfolio management team has redefined value stocks since the current manager took over in 2015, Ng said.

“They have maintained the investment approach and process formulated by their predecessors. However, the definition of a value stock was slightly adjusted,” he explained.

As a result of the fine adjustment, the universe of value stocks covers more growth companies, which is mainly comprised of technology companies, which typically carry a higher valuation. It also results in smaller exposure to the financial and energy sectors than before.

Ng said that the investment style of the Templeton fund is also driven by fundamentals and supported by local teams across the emerging and frontier markets.

“The Templeton team takes a buy-and-hold strategy with a long-term perspective. They are patient with their investments,” he added.

The Pinebridge fund has the more concentrated portfolio of the two. At the end of July, the Pinebridge fund had 58 holdings, which compares to the Templeton product’s 94 stocks.

The Pinebridge fund, however, is closer to the index than the Templeton fund.

Funds sector allocation versus benchmark (as of end-July)

Source: fund factsheets

Country allocation

Source: fund factsheets

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