Asante: Over the next quarter and beyond, we continue to maintain our focus on good quality companies and superior stock selection. At one end of the quality spectrum, falling input prices and cheaper currencies will be positive for the long-term profitability of a wide range of companies in our portfolio. In a downturn strong managements really earn their keep and create stronger franchises.
Given recent rises we have a number of concerns about the short-term outlook for emerging markets. Having rallied very strongly, markets are no longer attractively valued. Our favoured stocks in Brazil, China and India are expensive and we believe there is limited value in the global emerging market universe. We do, however, continue to find some attractively priced quality franchises in the less popular markets of Israel and South Africa.
e-fundresearch: Which fundamental factors are currently most crucial in your opinion?
Asante: We intend to stick to our investment philosophy which focuses on selecting the highest quality companies that we can find, provided they are reasonably priced. Macro economic factors, including views on politics, currencies, dynamics of the relevant industry etc, are incorporated at the stock discussion level, after identifying a high quality business which is reasonably valued.
e-fundresearch: Which countries and sectors are currently over- and underweighted?
Asante: We don´t target country weights - these are rather outcomes of where we find the cheapest companies that meet our quality criteria.
Overweight: Czech Republic, Egypt, Hungary, India, Israel, Malaysia, Mexico, Philippines, South Africa, Taiwan, Thailand and Turkey
Underweight: Brazil, Chile, China, Colombia, Indonesia, South Korea, Morocco, Russia, Peru and Poland
Increased exposure to Czech Republic, Egypt, India, Israel, South Korea, South Africa and Taiwan
Decreased exposure to Brazil, China, Mexico, Philippines, Russia and Thailand
We don´t target sectors but prefer stable rather than cyclical businesses and price givers to price takers.
Overweight: Consumer Staples, Health Care, Telecom Services and Utilities
Underweight: Consumer Discretionary, Energy, Financials, Industrials, and Materials
Increased exposure to Consumer Staples, Financials, Health Care and Utilities
Decreased exposure to Consumer Discretionary, Energy, Information Technology, Materials and Telecom Services
Portfolio weightings as at 30 September 2009
e-fundresearch: Are Global Emerging Markets going to outperform the MSCI World Index in the next 12 months?
Asante: We believe that the long-term growth potential of the emerging markets asset class will remain intact as emerging market consumers are in much better shape financially than developed world counterparts
We remain positive on the long-term outlook for the asset class as we expect economic growth to be higher than that of Western economies.
