Oil agnostic
The largest geographic allocations are to China and India, Exposure to both markets exceeds that of the benchmark and peer group, he said.
In China, Teverson likes the healthcare and ecommerce sectors. The fund is not invested through the Stock Connect, however, because A-shares have been overpriced, he said.
In India, the team believes Prime Minister Narendra Modi’s reform agenda will lead to increased investment and domestic consumption.
Elsewhere in emerging markets, the fund has been increasing exposure to Russia and Brazil despite the collapse in oil prices for those oil-producing markets.
Teverson explained that he does not start with view on macroeconomics or commodity prices and invest accordingly.
“The market preoccupation with macroeconomic headlines creates opportunities from mispricing. Excessive pessimism from investors on Russia and Brazil has allowed us to pick up individual businesses at very compelling valuations. “
In Russia, the fund owns mail.ru, which is involved in social networking and online gaming. He believes the company has growth prospects similar to China’s Tencent, and the fund has been able to buy it at a low valuation because of negativity toward Russia.
In Brazil, the Petrobras scandal has negatively impacted on midcap companies, and the weak currency and generally negative sentiment about the debt market have created a buying opportunity.
“We bought some quality companies at the lowest valuations in a decade. That’s more important than the top down view of whether we should be investing in oil producing or consuming countries.”
