View more on these topics

Adviser Fund Index

A theme that investors have been playing in the quest for returns is a move towards emerging markets and in particular the Asia Pacific region.

Looking at the AFI Aggressive index, three of the top five funds chosen by panellists are emerging market vehicles – First State Asia Pacific leaders, Ignis Hexam global emerging markets and Aberdeen emerging markets. The First State fund is also the most selected in the Balanced index. Across all three indices, the best-performing constituent fund over three years to November 1 is Investec emerging markets debt, which is up to 78.06 per cent. Aberdeen emerging markets has also been a strong contributor to all three portfolios.

Chelsea Financial Services managing director Darius McDermott has had a fairly hefty weighting to Asia Pacific for some time. He says: “If you were to give me £1 of equity, I would rather invest it there than in the developed world although there are still good managers in, for example, the UK.

“In fact, the more people start to go elsewhere, the more I start to get a bit contrarian but I do believe the fundamentals in Asia are growing faster than in the developed world. In aggregate, it is becoming an incredibly good place to invest.”

The AFI Aggressive index saw its overall allocation to Asia Pacific rise by 7 per cent to 18 per cent in the November rebalancing. The allocation in the Balanced index was up by 4 per cent to 11 per cent and even in Cautious, there is a 6 per cent weighting, up by 3 per cent from the previous rebalancing. These figures reflect the belief of many advisers that opportunities in the East are more attractive than those in the West.

City Asset Management research director James Calder says that while the firm does not invest relative to benchmarks, if one were to look at the Apcims indices, its portfolios would be massively overweight in the Asia Pacific region.

He says: “You have got all the usual arguments; a rising middle class, no debt, markets are nowhere near as fickle or volatile as they used to be and there is strong corporate governance nowadays. It is an area where we feel there is a strong possibility of decent growth levels.”

Calder says for a British-based investor, the risk is slightly higher but it is worth taking.

City Asset Management accesses the region via holdings in Veritas real return Asian and CF Canlife Far East, which Calder describes as an undiscovered gem on which the manager takes a strong macro view. He says: “Our holdings within that part of the world have the ability to protect on the downside, we try to get the best of both worlds. The only downside is if the market is strong they tend to lag but if you are looking for absolute returns, that is not an issue.” Calder says he is much more confident in terms of buying long-only managers in the region.

McDermott says that aside from equities, emerging market debt for some is almost a new asset class. He says: “Would I rather buy emerging market bonds than developed market bonds? While I appreciate the value argument is no longer there, I would put my mother’s money into emerging market debt.”

Recommended

Campaigning pressure pays off with FSCS’s Lifemark move

The Financial Services Compensation Scheme’s decision to recognise 100 per cent losses at Lifemark comes after months of campaigning. The FSCS said last week it will take the view that investors in Luxemburg-based Lifemark’s traded life settlements, in which £349m was invested, have lost 100 per cent of their investment for claim purposes. This means […]

Leeds BS launches direct-only three-year fix at 3.45%

Leeds Building Society has launched a new three-year direct-only fixed rate mortgage at 3.45 per cent. The 3.45 per cent product is available at 75 per cent loan-to-value, while the building society charges 3.89 per cent for loans up to 80 per cent LTV and 5.29 per cent for loans up to 85 per cent […]

16

Can client risk questionnaires be relied on?

Would you expect to gain great insights at The Financial Services Research Forum? Perhaps not– you might think of actuaries and product boffins. In fact it’s not like that at all, as I discovered on my first attendance at their annual forum on November 16. I did come away with several insights into financial decision-making […]

1

Middle-ground funds may be hit by EU risk rules

Investment experts have warned that new European regulation around risk ratings could force investors away from middle-ground funds and result in a build-up of misunderstood risk in their investment portfolios. The EU’s committee of European securities regulators is looking to introduce a new two-page document which adv-isers must present to clients from July 2012, called […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com