Raheel joined Artemis in 2014. He has co-managed Artemis‘ ‘global emerging markets equity‘ and ‘global equity’ strategies with Peter Saacke since launch in April 2015 and since April 2022, respectively. A Cambridge graduate in electrical engineering, he joined Fidelity International in 2002 as a quantitative analyst. In 2007 he was promoted to portfolio manager for a range of funds which grew to $2.5 billion.
What made you decide to go into the financial sector? Did you have any other vocations?
I studied as an engineer, but was drawn to the financial sector early on in my student life. My first experience was on an investment bank trading floor as part of a summer internship. At that time, I had little idea of what it involved and had very little knowledge of financial markets. Yet, by the end of that summer, I was convinced that I wanted to pursue a career in investing. The environment within financial services back then was entrepreneurial, fast-paced and in need of people with mathematical or science backgrounds to solve exciting problems in a way that those with economics or finance backgrounds may have approached differently. The learning curve was a very steep one, but one that I continue to enjoy to this day.
How should investors orient their portfolios in this environment?
I would emphasise the need for diversification and having a longer time horizon. Diversification has taken less relevance in recent years, given the huge success of a few companies in the internet and technology space. Similarly, these substantial returns have created a fear of missing out culture amongst investors that is driving valuations higher. Looking ahead, we think assets that are reasonably valued have the potential to generate higher returns. As the market regime is showing signs of changing, with more inflation in the system, interest rates moving higher and central banks moving away from easing, a valuation discipline becomes much more important. Looking across investor holdings today, we see lighter weightings to Emerging markets and to the value investment style. This is largely a result of their historic poor performance, but there are reasons to be more optimistic with their prospects and we think investors should be adding to both these areas.
What can your fund contribute that others cannot in the current market conditions?
The process we employ is a rigorous approach to screening thousands of companies from all around the world for their favourable financial characteristics. This has historically led us into many contrarian or overlooked areas of the market. In cases where those companies have been showing improving trends, the upside has been quite significant. These are often found in mid and small capitalisation companies, an area our process is very efficient at screening through. Currently, our fund has a significant bias to deep value parts of the market. This makes its positioning quite different to much of the peer group, where the emphasis has been much more on growth. Historically, we have also been very effective at investing in companies that have delivered strong fundamental growth. We think the favourable combination of deeply discounted valuations and attractive growth prospects is likely to be a rewarding strategy going forward.
Could you give us an example of a stock that you have held for a long time in your portfolio and why?
Investors have been sceptical about SOEs in Emerging markets and those in China have been shunned. As this view has become entrenched, we have found contrarian opportunities selectively in the space. China is undergoing a significant policy shift. This is likely to be beneficial to the domestic economy as well as a number of neighbouring ones. We like selective financials and infrastructure plays in the SOE space and have been patient investors in them. We think investors may be underestimating the scale of China’s infrastructure efforts. From the perspective of the railway sector, we note that order growth across equipment players is strong and highlight China Railway Group as a key beneficiary for this trend. Despite this supportive growth, it trades on a much lower valuation than other Asian competitors.
What ratios does a company have to meet to be part of your portfolio?
Rather than focus on one or two specific ratios, our investment process has been designed to systematically invest in companies showing favourable characteristics across a wide range of metrics. SmartGARP, our stock selection screening tool, aims to identify companies that are growing faster than the market but are trading on lower valuations than the market. They should be enjoying strong and consistent upgrades to profits forecasts and be under-owned by the investment community, while at the same time benefiting from helpful macroeconomic trends. The metrics we focus on can be characterised by growth, value, estimate revisions, momentum, accruals, ESG, investor sentiment and macroeconomic trends.
If you had to define yourself with 3 words, what would it be and why?
When it comes to investing I would describe my approach as patient, flexible and determined. It is important to have long time horizons when investing, but also to make changes when necessary, particularly if the facts change. Finally, despite volatile market environments and the many shocks that you can receive as a fund manager, it is important to stay committed to the discipline.
What is your favorite thing to do in your free time?
Much of my free time is taken up by my three children. I like to help them follow their passions in life. Outside of this, I am keen on sports such as football and cricket and enjoy downtime by reading or watching movies and tv shows.
