As investors renew their focus on emerging markets, it could be time to refresh the range of funds available. Still dominated by behemoths Aberdeen and First State Stewart, the Global Emerging Markets sector has nonetheless played host to a number of new funds run by experienced managers that offer their own ideas on alpha generation.
Manulife Asset Management may not yet be a household name in the UK but with some £226bn ($300bn, €270bn) in assets across North America and Asia, its push to build a presence in Europe is a notable development.
It helps that the firm’s global emerging markets equity strategy is headed up by familiar faces, Kathryn Langridge and Philip Ehrmann, whose talents can be accessed via a Ucits fund.
Having both been poached from Jupiter in 2014, the pair boast a wealth of experience in the domestic funds space that also spans Ehrmann’s years on Gartmore (now Henderson) China Opportunities Fund and Langridge’s time at Invesco Perpetual.
Lead manager Langridge has 36 years of experience in emerging markets, having begun her career in Hong Kong at Jardine Fleming in the 1980s.
She wrote Jardine Fleming’s first piece of investment research on Thailand, and was one of the first investors to meet with Samsung Electronics in 1985 when the Korean market – now 14% of the emerging markets index – was closed to foreign investors.
Asia provocateur
“It was in the early days of investment banking in Asia. I was part of that formative period and it was a powerful influence on my career,” she says.
“China, which is currently around 25% of the MSCI Emerging Markets Index and expected to continue to grow, is a market that did not even exist in the investment landscape in the 1980s.”
Langridge says the emergence of higher standards of corporate governance has been one of the biggest changes she has seen in her career. “It is typical in emerging markets for the accusation to be levelled that corporate governance is weak, but to suggest emerging markets have a monopoly on poor standards of corporate governance is misplaced.
“However, there is no doubt that with a bigger institutional and international shareholder base, the need to access international capital has brought about a profound change in standards of accountability, transparency, openness and accounting.”
Kicking tyres
A team of four in London – the two managers and their analysts David Dugdale and Tarek Shahin – place an emphasis on visiting companies, “kicking the tyres” and meeting management.
Their investment philosophy can be distilled down to identifying inefficiencies in valuation of the best quality businesses, which are able to deliver superior levels of compound earnings growth through a market cycle.
“Quality is defined by the strength of management. It is our job to understand the motivation, the skills and strategic vision of the management in which we are investing,” says Langridge.
“What I also want to see is an alignment of shareholder interests, that the companies in which we are investing and the management with whom we are entrusting client assets have interests that are aligned with ours as minority shareholders.”
Echoing the guarded stance on corporate governance, this emphasis on ‘quality’ means the team are unlikely to invest too far down the cap scale.
