The blend of macro (asset allocation) and stock picking is clearly where the managers feel they can add value.
Emerging markets have been one of the strongest sectors in 2014. Often the likes of First State and Aberdeen are associated with these markets however there are a growing breed of ‘new’ managers coming into the market who run much smaller and more dynamic and liquid assets.
We are constantly searching for these managers to identify potential ‘star quality’. Many of these funds tend to be offshore which means that they are not always available to investors. One of the funds we recently found was the GAM Star North of South EM Equity Fund.
Initially I was put off because of the number of holdings (just over 100) and a feeling of no conviction to one stock (average weightings in top ten are between 1.5% and 3%). The fund had a feel that at best it would track the index.
Listening to the manager I didn’t initially get a strong sense of how he approached investing however as I started to research further it became clearer what the manager was looking to achieve and how this fund might be attractive to investors. More importantly for investors since launch it has significantly outperformed the index.
With this in mind I wanted to try and highlight some of the key points of how the manager approaches investing and highlight some of the approaches he explained in our discussion.