The trust continues to invest across a diversified portfolio of equities from across the globe, from Latin America to the Far East.Diversified the trust may be, a quasi-tracker it is not. True, the approach is generally conservative and long-term but it is also on occasion contrarian, even unfashionable. Where we do have strong long-term investment convictions, we back them. Most recently, we made a major shift in asset allocation from around 5 per cent exposure to emerging markets 18 months ago to just approaching 15 per cent of the portfolio today. Emerging markets may account for a tiny proportion of global equities but the demographics make a compelling case. Emerging markets have youthful populations, a key ingredient for economic dynamism. For example, Mexico, where the average per capita income is just $6,500, is now already a bigger US trading partner than either the UK or Japan. In contrast to the staggering growth in some of these developing markets, stockmarkets are shrinking in the West through share-buybacks and the activities of private equity firms. This growing influence of private equity in the developed markets is something that Foreign & Colonial has been tapping into over the last two years. The trust has to date made commitments to two specialist global private equity funds,HarbourVest Partners and Pantheon Ventures, and is looking to grow its long-term exposure further. The international scope of F&C means a number of investment professionals are involved, each picking stocks in the markets they specialise in. My role as overall fund manager of the trust is to focus on strategy, asset allocation and working with the board. Last year’s merger between F&C and Isis Asset Management, has resulted in an enlarged dedicated strategy department to help identify key macro trends and develop global tactical asset allocation. The merger has added strength across the fund management team and resulted in some new colleagues working on the trust. Davina Curling, who joined from the Isis side of the merger, is now managing the European portfolio. In the past, this had a blue-chip bias but she has increased the exposure to mid caps. Of course, in recent years, stockpicking has not been strong in every area. The board is looking for improved performance in its North American equity portfolio with the adoption of a higher-alpha approach. F&C Asset Management, like many other UK-based investors, manages the majority of our North American assets on a low-tracking error basis. We have been working with the board to provide a solution. As the board recently announced, the expectation is that, subject to due diligence, a manager of manager approach will be adopted for much of the US assets. The role of the multi-manager will be to identify locally based fund managers in the US to run segregated mandates for the trust on a higher-performance basis. The US smaller company portfolio will continue to be managed by F&C in London as our record is strong in this area. Jeremy Tigue is fund manager of the Foreign & Colonial Investment Trust plc and head of global Equities at F&C Asset Management plc
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