It therefore may only appeal to those who believe these economies will be the drivers of the future and feel that other funds cannot give them that access.
The Allianz BRIC Stars Fund was launched in 2006 and for a few years delivered investors with above average returns (from launch in February 2006 to the end of December 2009 it returned 68.44% against a benchmark of 40.5%).
However, as Russia, India, Brazil and China have slowed so the performance of the fund has fallen away. (Between 1 January 2010 and 30 April 2014 the fund was down 23% against a benchmark which is down 14%).
For us it highlights the dangers of investing in specific areas within emerging markets especially if the managers remit restricts them from growth outside of the region. The original manager was Michael Konstantinov and he was replaced in 2013 by Kunal Ghosh.
At the same time the investment remit of the fund was changed so the fund had the potential to invest 33% outside of non BRIC economies. Clearly the managers still believe in the BRIC story but want the flexibility to invest in other economies if they see opportunities. However, investors holding assets in emerging markets and Asia will already have access to these economies albeit smaller and surely this is no more than another Emerging Markets Fund but with limited investment powers.
We can’t say the fund has had strong performance because it is too early to say however the new manager has a strong record in investing in emerging markets.
In the update we will share some of the thoughts from the manager.