MAM Funds is tapping into the growth potential of emerging markets in its CF Miton global growth portfolio through companies listed in the West.
The firm has an investment philosophy that is fundamentally driven by asset allocation, with a top-down approach to stock selection.
MAM says companies that are listed in developed markets but which have business activities in the emerging regions are currently cheaper than the firms which are listed locally. So at the moment they are providing better value.
Fund manager Sam Liddle says that gaining exposure to emerging markets in this way does not in itself lower the element of risk. But buying cheaper stocks can reduce risk relative to more expensive stocks. This is because a market correction would have less of an impact.
Liddle says equities are preferred in the CF Miton global growth portfolio because they are relatively attractive compared with other asset classes. He says this is because US treasuries and UK gilts are in the last phase of a 20-year bull run while cash is paying nothing to investors and further falls are a possibility for Western property markets next year.
Liddle says he is holding funds such as Neptune income in the UK and Walker Crips UK equity growth to access equities listed here that are doing well in emerging regions.
He thinks these stocks will become more attractive when interest rates eventually start to rise and if inflation becomes a problem.
He says: “Good companies with strong balance sheets, decent earnings from emerging economies and a yield of maybe 5 per cent look an attractive proposition. We think there is some time to go before the bull market in treasuries and gilts comes to an end but we are at the tail end of it.”