Ariel Wang from Gemway Assets is our Fund Manager of the Month

Ariel Wang is a senior PM at Gemway Assets, a Paris-based fund management company with a focus on emerging markets. She co-manages the firm’s 1.2b euro equity investments. Before joining Gemway in 2017, she used to be a Global PM, managed both dedicated funds for UHNW clients and mutual funds at Banque Transatlantique, one o France’s oldest private banks. Ariel is a Chinese national, graduated from ESCP Europe and has more than 18 years’ experience with financial markets. She also teaches Portfolio Management course at ESCP.

What made you decide to go into the financial sector? Did you have any other vocations?

In my childhood and teenage years in China, I witnessed the rapid development of financial sector and capital markets in the country. The major role played by financial development in the Chinese economic expansion left me a strong impression. In the meantime, I was also shocked by financial turmoil’s devasting effect on countries’ stabilities and people’s daily live during the Asian Crisis. The reflect on the role of finance, a sector which touches almost every sphere of humor endeavor, propelled me to pursue a career in financial industry. While I had also spent many years studying painting and music instruments (Pipa and Violin), I feel grateful to have art as one of my greatest passions, and a guardian of my inner peace.

How should investors orient their portfolios in this environment?

As a record election year with ongoing geopolitical conflicts, 2024 is set to remain eventful. But it also offers a more constructive interest rate environment, as major central banks are now preparing to cut rates after delivered the most aggressive tightening in almost 40 years. We think investors should keep emerging markets equities on their radar this year. In a scenario of “soft landing”, this asset class could benefit from Fed’s upcoming rate cutting cycle. With the EM universe, we think India, Mexico, Indonesia, Saudi Arabia are all set to ride multi-year structural tailwinds. Taiwan and Korea are well positioned to benefit from the recovery of technology sector and AI-related emerging opportunities. Brazil seems attractive from the monetary policy normalization and valuation perspectives. While China continues to face structural challenges, its cheap valuation and the low investor positioning should not be ignored. With a strong and ongoing policy support, its risk/reward has become more
attractive.

What can your funds contribute that others cannot in the current market conditions?

The 3 equity funds which I co-manage at Gemway (GemEquity, GemAsia, and GemChina) offer investors the opportunities to invest in high quality growth in emerging markets. Our approach is conviction-based, only select companies with strong fundamentals, good earnings visibility over a long-term period, and attractive risk-reward. ESG (including engagement) is integral to our investment process.

Could you give us an example of a position that you have held for a long time in your portfolios and why?

We have been a long-term shareholder of TSMC, the bellwether for the global semiconductor industry. While the company has benefited from the strong growth of fabless chipmakers (Apple, Qualcomm…) over last decades, it has consolidated its dominant position in particular at the leading edge, as it is one of the few players which have overcome increasing entry barriers (raising manufacturing cost, increasing technology complexity, more intens R&D…). We believe TSMC will be a winner of AI semis in the long term as it enjoys a monopoly in AI accelerators and has >80% of market share in on-device AI.

What ratios does a company have to meet to be part of your portfolio?

We have a comprehensive quantitative approach to select companies. Among the key financial ratios, a sustainable high ROCE (return on capital employed) is considered the most important as it is a good indicator of company’s superior underlying efficiency at turning capital into profit. We also value highly FCF (free cash flow) to sales which gives us a good idea of company’s ability to generate “free” cash which is the primary funding resource of its future growth and additional shareholder returns. However, we don’t exclude companies with temporary low FCF/sales ratio, as long as such investment could consolidate its competitive advantages and make positive contribution to ROCE.

If you had to define yourself with 3 words, what would it be and why?

Passionate / Curious / Determination
I consider myself as a passionate person. My passion for everything, both in life and work makes me feel truly alive and provides me with endless energy. I am very curious, with a strong desire to learn new things, ask questions and try to understand what’s going on behind the scenes. I am also a highly determined person with strong commitment to my own goals. Choose to go to Paris alone at the age of 17 without knowing any word in French, managed to self-finance both study and living would be a good example of my determination.

What is your favorite thing to do in your free time?

I love reading (although I already read a lot as a PM) and listening to different genres of music. In the weekends, I like to wander around a museum or an art gallery but also like to go to fresh markets to find my cooking inspiration. Yoga training and meditation have become increasingly important to me in last years as they help me to find mental balance and grounding.