Carmignac senses EM turnaround, to benefit new multi-asset fund

French asset manager Carmignac Gestion has launched the multi-asset Carmignac Emerging Patrimoine Fund, despite macro- and market headwinds recently affecting the developing world.

The fund will focus on emerging markets equities, fixed income and currencies.

It follows similar multi-strategy developing markets products from Goldman Sachs Asset Management, AllianceBernstein, and Lazard Asset Management. In a similar vein, RCM MultiManagement is to launch a multi-manager EM product soon.

Carmignac’s own EM fund comes despite various challenges emerging markets have posed so far this year.

Output growth from the economies in the second quarter was the weakest it has been for two years, according to HSBC’s Emerging Markets Index Report.

Yet Carmignac’s management team believes emerging markets valuations are cheap and that the asset class will be the first to bounce back from the challenges various classes have faced over summer.

Founder and chairman of Carmignac, Edouard Carmignac (pictured), admitted his group needed to be “gutsy” to launch the fund at a time when “emerging markets are being decimated”.

“We are not scared of taking decisions, even when markets are diverse,” he said.

“Diverse” market conditions might be an understatement, given the performance of Carmignac’s other funds focused on emerging markets.

Carmignac Emerging Discovery is down 25.33% year to date, Carmignac Emergents is down 18.53%, while Carmignac Emerging Patrimoine, which first started trading in April 2011, is down 5.26%.

In comparison, the MSCI Emerging Markets Index is down 22.05% year to date. Its current price, as calibrated in US dollars, is 893.465, a significant drop from 1,126 at the end of 2010.

Frédéric Léroux, global allocation manager at Carmignac, said the recent downturn in emerging markets is about to reverse, reinforcing his confidence in the newly launched fund.

“Developed markets are in a real mess… and emerging markets are about to resurge,” he said.

Simon Pickard, Carmignac’s emerging equities fund manager, explained that there are a number of exciting stock picking opportunities in Brazil, India and China.

He added that consumer staples such as South Korean car manufacturers or South Africa’s Shoprite may be particularly interesting investments.

There are early indications Carmignac Gestion’s confidence in future emerging markets valuations may be justified as the price of the MSCI Emerging Markets index has recently improved, jumping from 851.55 on September 26th to 893.47 on September 27th.

Further analysis of Carmignac’s emerging markets strategy will be included in the next issue of Investment Europe.

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