The FMG rising 6 fund, a Luxemburg Sicav, invests in these regions because it believes they have the highest long-term growth in the world. The firm has analysed returns from these six regions over the last eight years and found that they have beaten the MSCI Emerging Markets, MSCI Bric and MSCI World index during this period. In particular, the firm highlights the potential of the rising six in contrast to developed markets which are suffering from an ageing population, a high cost base and high levels of debt.
FMG points out that company valuations for the rising six regions tend to be the same or lower than similar firms in developed markets, but with higher growth potential.
FMG’s fundwill gain exposure to the six regions through exchange traded funds, Ucits III funds and managed accounts, with the ability to hold other assets where appropriate. The multi-manager takes a top-down macro-economic view to determine the asset allocation between the six regions within a range of 10 to 25 per cent of the overall portfolio.
The investment team then selects three to six of the best managers and funds for each region, with a strong track record being a vital consideration when selecting active fund managers.
Emerging market funds of funds have recently been launched from Baring Asset Management and Generation Asset Management, but both invest in a wider set of emerging markets using a multi-asset strategy.
FMG’s focus on six regions and a bias towards equities leads to a more concentrated approach which the firm sees as the best way to generate returns from the region. However, the multi-asset approach may be preferred by some investors because it can diversify asset class risk, as well as manager, region and sector.