Dara has managed the US Emerging Markets strategy for many years and took over the UK version in 2019. This strategy is now a mirror image of the US strategy. A couple of observations when we were comparing to other EM strategies was that the holdings are very similar, and this is reflected in a fairly low active share class, which means that this is likely to be fairly similar to the benchmark. The fund has managed to significantly outperform the benchmark and the question is whether this is luck or skill. Holding the big players means that you automatically have an advantage. This is something that investors need to consider when looking at this strategy.
Turning to the update, Dara started by explaining that he has never witnessed so much interest in the asset class over the last 10 years, and there have been strong inflows of capital. This reflects a changing universe. EM of the past was about materials, industrials, energy and banks, and this has now changed to global leaders. These global leaders offer good returns with a focus on shareholder returns. Over 60% of the index is now tilted towards structural growth. The number of stocks in the universe has also almost doubled over that period….read more