Lincoln Financial Group has created an emerging markets unit trust to be managed by Delaware International Advisers which manages Lincoln's Far East trust and emerging markets life and pension funds.
The unit trust will be run along the same lines as the life and pension funds and will invest in a range of industrial sectors in countries such as South Africa, Brazil, China and India.
Although Delaware employs a team approach to fund management, Bob Akester will take ultimate responsibility. Akester has more than 30 years' investment experience and joined Delaware in 1996. He was previously director of Hill Samual Investment Management.
Delaware applies a value approach to stock selection and focuses on emerging countries with string economies. Dividends are used as a guide to measure the profitability of companies, which will often have competitive advantages such as access to raw materials or climates not available in developed countries.
Information on companies within emerging markets is thin on the ground and this may lead to companies trading at a price that does not reflect their growth potential. Delaware will rely on company visits to help identify those companies. The eight-strong investment team will spend two months a year visiting companies and will also arrange meetings in London with the management of these companies.
Although Lincoln's Delaware-managed Far East trust demonstrates a good track record in a volatile region, the political instability in emerging markets which leads to stockmarket volatility can surprise investors. Consequently, this type of fund is high risk and is likely to be used as a small part of a wide portfolio.
According to Standard & Poor's the Lincoln Far East trust is ranked third out of 55 funds based on £1,000 invested on a bid-to-bid basis with net income reinvested over three years to June 14, 2004.