Latest EM fund launched as Martin Currie reorganises
Edinburgh, UK-based asset manager Martin Currie is to launch a global emerging markets fund on December 15th, its latest move in the ongoing reorganisation of its business around key themes.
The Martin Currie GF – Global Emerging Markets SICAV will offer US dollar, sterling and euro share classes, managed by Kim Catechis,(pictured) Alastair Reynolds and Divya Mathur, the same team running the firm’s UK open-ended emerging markets fund.
The team will pick individual companies with distinct competitive advantages, resilient balance sheets and well-founded growth, where long-term growth prospects are not yet reflected by their share prices. This will entail a high-conviction investment approach with typically no underweight positions, with 40-60 stocks in the fund.
Minimum investment will be $5,000 or equivalent, with an annual management charge of 1.5%. The late December launch is to satisfy data measurement constraints around calendar year periods, notes Andy Sowerby, managing director, sales, marketing and client service at Martin Currie.
Fund manager Catechis noted: “The opportunities in the developing world are vast. But, we shouldn’t get carried away by the strong headline growth that many emerging markets continue to report: this won’t be consistently reflected in index returns. We should be excited by the remarkable growth opportunities at the level of the individual company. That’s where a team of experienced active investors can add real value.”
Sowerby said the opportunities presented by emerging markets are increasingly widely recognised. Countries currently defined as ‘emerging’ will be worth more than 50% of global GDP by 2014. Capital is seeking new channels to these markets.
In the UK, there are 46 UK-domiciled global emerging markets funds, 12 China funds and just seven Latin America funds. “If we compare this with over 450 UK equity funds in the IMA universe, it is clear the current shape of the UK investment industry fails to reflect future investment opportunities,” says Sowerby.
Allocation is happening from an exceptionally low base and institutional investors continue to be structurally underweight the asset class, a reflection of the most commonly used benchmarks. The MSCI still allocates only around 2% of its ACWI index to China, despite the fact that the country represents almost 8% of the world’s capitalisation.
The emerging market focus is part of other initiatives at Martin Currie. In 2009 CEO Willie Watt led a business review to identify how to exploit the changing fund market and evolving investor attitudes.
The overall decision was to remain a privately-owned equity specialist house and to take account of global themes in developing the firm’s fund range. Among other findings was the notable effect of changing demographics and wealth patterns globally, the demand for income and capital protection among investors, the emergence of demand for absolute return products, and the need for a global integrated research platform for the business.