13th May 2013
Broker Hargreaves Lansdown has suggested three alternative emerging market funds now that the First State Emerging Markets Leaders fund has soft closed as trade website Money Marketing.
It will still be possible to invest but the fund manager will now charge the full 4 per cent upfront charge from September this year, which should discourage many investors.
The move comes just a months after Aberdeen soft closed its emerging markets offering with Mindful Money reporting on alternatives in February. Hargreaves Lansdown acknowledges that investors’ options are narrowing.
Adrian Lowcock, Senior Investment Manager at Hargreaves Lansdown, says: “The shift of economic power from the west to the east means that all investors should have some exposure to emerging markets. Finding a good manager who can add value will become much harder once the First State Emerging Markets Leaders fund soft closes. We have identified three alternative funds which we believe will deliver.”
JP Morgan Emerging Markets – Manager Austin Forey takes a long-term approach to investing and investors have been rewarded for their patience. He has managed the fund since its launch in 1994. He is a fan of consumer businesses with pricing power and will tend to be anti-cyclical. Forey has a large exposure to China, around 21%, and believes the region is valued attractively and sees room for improvement in market sentiment.
Newton Emerging Income – Managed by Jason Pidcock and Sophia Whitbread this fund uses Newton’s thematic approach. Income is becoming a bigger story in emerging markets and on a global basis, 23% of stocks currently yielding over 3% are now located there. Investors can access the growing income story in countries such as South Africa which has a higher dividend pay-out ratio and experienced management team.
JM Finn Global Opportunities Fund – Anthony Eaton believes growing demand for goods and services in the emerging markets should be sustained as incomes continue to rise and seeks to take advantage of economic progress taking place in the developing world. The fund has been positioned towards global consumer brands, rather than investing directly in emerging market companies, to benefit as consumption rises rapidly across the East.