Sebastian Lyon and Francis Brooke have added emerging markets exposure to the £86m Troy Spectrum fund following the regions’ recent underperformance.
The MSCI Emerging Market Index dropped by about 1.3 per cent over the first seven months of 2013, while the S&P 500 rose by 29 per cent, as investors worried about slowing growth and the impact of tapering by the Federal Reserve.
Troy Spectrum started a position in Edward Lam’s £315m Somerset Emerging Markets Dividend Growth fund in July in a bid to capitalise on this “dislocation” between emerging and developed markets. The move took the allocation to emerging markets from 2 per cent to 3 per cent.
Lyon and Brooke say: “[Lam] has defended capital well when markets have fallen and should benefit from any recovery. The outlook for emerging markets remains clouded by slowing growth and weak currencies. We hope to add to this holding if prices fall further.”
Somerset Emerging Markets Dividend Growth has a research-driven approach which often identifies companies that are off the beaten track and not noticed by other investors.
Among its 43 holdings are Turkish acrylic fiber manufacturer Aksa Akrilik Kimya Sanayii, Chinese miniature electronics firm AAC Technologies and Polish insurer Powszechny Zakład Ubezpieczeń.
Hargreaves Lansdown investment analyst Richard Troue says: “Most investors are aware of the capacity issues faced by stalwarts like Aberdeen and First State and are on the lookout for alternatives, so a more nimble, boutique approach like this could be attractive.”