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OPM identifies value in Russia and Brazil

OPM Fund Management is selectively increasing emerging market exposure in its balanced managed fund with new positions in Russia and Brazil.

The firm has added Neptune Russian & Greater Russia to its balanced managed fund, which also holds the JP Morgan Russian securities investment trust.

OPM fund manager Tony Yousefian says the firm’s balanced managed fund did well out of emerging markets last year, with around 15 per cent invested in pure emerging market equities. This was reduced to 5 per cent in January as OPM felt these markets, particularly China, were overbought.

OPM expects the trend for long-term growth to remain in emerging markets but thinks there is still some way to go before markets such as China represent a good buying opportunity. The firm likes Russia because it did not perform as well as other emerging markets last year.

Yousefian says the Russian economy is on a different cycle compared with other emerging markets and he sees relative value in it.

OPM also invested in the JPM Brazil investment trust at launch, which meant the company qualified for warrants issued on the basis of one for every five subscription shares held. OPM wanted to invest at the outset rather than trying to pick up shares at a discount on the secondary market as it felt holding the warrants would limit the impact of any discount that immediately occurred.

Yousefian says: “Few collectives invest in Brazil and the majority are offshore. The JPM Brazilian proposal came across well because it is not investing in mainline Brazilian stocks but looks at medium to small stocks.

“You could buy a Brazilian ETF if you wanted exposure to mainline Brazilian stocks but the index is skewed towards no more than three or four stocks. It is not a true representation of what is happening there.”

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