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Three Counties halves GEM exposure

Three Counties has cut its global emerging market exposure by 50 per cent because of volatility concerns.

The firm has sold out of the £553m  Lazard Emerging Markets fund and £1.3bn Investec Emerging Market Local Currency Debt fund.

Three Counties IFA Andrew Alexander says the key risks to the sector are tapering of quantitative easing in the US, a slowdown in emerging market economies and Japan’s  ‘Abenomics’ policy.

Alexander, who had about 5 per cent exposure to each of the funds, has reinvested the money in the £60m Unicorn UK Smaller Companies fund.

He says he has chosen this fund because he is keen to avoid accidental exposure to emerging markets.

“I am halving my GEM exposure because I do not think the market is going to get any better,” says Alexander. “I did not want to invest in emerging markets by proxy, as even with European funds you have to be careful.”

Charles Stanley Direct head of investment research Ben Yearsley agrees that the UK Smaller Companies fund is a good option but questions the timing of Alexander’s move.

Yearsley says: “It seems to be a strange time to be halving exposure now after there has already been so much volatility. There will undoubtedly be more volatility and to reduce exposure now means you are locking in your losses.

“The Unicorn UK Smaller Companies fund is a good fund and I like the team, but it does have a large overseas exposure so it is not an out and out UK fund.”

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