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Mellon seizes on emerging markets outsourcing

Mellon Global Investments has expanded its range with the introduction of the Mellon Global emerging markets fund.

This offshore fund is aiming for capital growth by investing in emerging market economies such as India and China.

The fund is managed on Mellon&#39s behalf by its US subsidiary, The Boston Company, which specialises in value investing. It has managed emerging market portfolios since 1995.

Kirk Henry, co-director of international investments at the company, will take responsibility for the fund. Henry joined the company in 1996, having previously worked at Cseh International & Associates and Provident Capital Management. He started his career as an analyst then moved into portfolio management.

When running the Mellon fund, Henry will use the MSCI Emerging Markets Index as a benchmark. He will take a bottom-up, research-driven approach to stock selection, while aiming to preserve capital.

The portfolio will contain stocks that Henry feels are undervalued but likely to increase in future. Factors such as good management, clear business strategies, strong cash flow and financial strength will determine which companies&#39 stocks are chosen.

Emerging markets have the potential to produce good returns because changing economic and political landscapes can be exploited. Countries such as China and India, where labour and the cost of materials is cheap, are being used as bases for outsourcing by companies in the West and this trend could represent good investment opportunities.

However, emerging markets can be very volatile. Despite this fund&#39s focus on capital preservation, it is likely to be of interest only investors who are prepared for higher than average risks.

According to Standard & Poor&#39s, the Mellon global equity fund is ranked 214 out of 436 funds based on £1,000 invested on a bid-to-bid basis with gross income reinvested over three years to December 13, 2002.

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