Oaktree added the emerging market equity strategy in 1998, based on our belief that emerging markets represent an inefficient market where companies are often poorly analyzed and securities mispriced, meaning that an approach that hedges market risk is highly desirable. Opportunities are typically found in the Asia Pacific region, Latin America, Eastern Europe, the Middle East, Africa and Russia.

We favor a core of long-term equity positions, complemented by opportunistic trading of both longs and shorts, with occasional limited use of leverage.

"Combining long and short positions enables us to reduce exposure to macro factors," says Tim Jensen, who heads the strategy along with Frank Carroll, "and to sharply reduce our vulnerability to unpredictable events."

As is the case with many Oaktree strategies, we utilize a bottom-up, value-driven search for misvaluations from a lengthy focus list of companies, while employing a top-down risk management overlay to prevent over-concentration by country or industry.

"We emphasize little-known companies rather than market leaders," adds Carroll, "and our investment approach is extremely flexible."

Click here for information regarding risk disclosures associated with the strategy.