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HERMES GLOBAL EMERGING MARKETS
FE Alpha Manager Gary Greenberg ’ s five crown-rated fund has managed to grind out a positive return in a woeful period for emerging markets
Emerging markets funds have found themselves under the spotlight recently , given their strong performance year-to-date .
While the sector is renowned for its volatility , having suffered from a slowdown in China over the past few years and the resulting collapse in commodity prices , it is looked upon favourably for its growth potential .
What is something of a rarity , though , is an emerging markets fund that can benefit from this growth potential while also protecting capital on the downside . Hermes Global Emerging Markets has , however , managed to do exactly that .
The fund has been headed up by FE Alpha Manager Gary Greenberg since July 2011 , over which time it has made 11.97 per cent compared with hefty losses from its peer group composite and MSCI Emerging Markets index benchmark . What makes this even more impressive is that Greenberg has achieved this with a below-average annualised volatility and maximum drawdown ( the most investors would have lost if they bought and sold at the worst possible moments ).
FILE
MANAGER : Gary Greenberg FUND SIZE : £ 593.4m LAUNCHED : 09 / 12 / 2008 OCF : 1.14 %
The fund has a fairly concentrated portfolio of 56 holdings – its top-10 account for just over one-third of assets under management . These stocks include the likes of Chinese investment holding company Tencent , e-commerce giant Alibaba and web services firm Baidu .
The fund is 8.11 percentage points overweight China versus its benchmark , meaning it accounts for just shy of one-third of total assets . Other less drastic regional overweights include Taiwan , Indonesia and Hungary , while the manager is underweight Korea , South Africa , Brazil and Mexico .
When speaking to FE Trustnet earlier this year , the manager said
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Jan 12 he uses a bottom-up process to pick stocks , which he couples with broader macroeconomic views .
“ I ’ m not sure how many people in long-only emerging markets integrate bottom-up and top-down ,” Greenberg said . “ I think a lot of people are bottom-up and I don ’ t understand how you can just be bottom-up in the world we live in .”
“ It strikes me as being an incomplete process . Since we took over the fund four-and-a-half years ago , we have added alpha . Most of this is bottom-up , but a good third has been from top-down . It ’ s not impossible to do , and it seems to me that [ the issue of bottom-up-only investing in emerging markets ] is an elephant in the room .”
The manager also uses Hermes ’ in-house ethical research group EOS to assess environmental and social factors before buying into a stock , which he believes indicates strength in the management team while also showing support for firms that prioritise ethical practices .•
PERFORMANCE OF FUND VS SECTOR AND INDEX UNDER GREENBERG
Hermes Global Emerging Markets ( 11.97 %) IA Global Emerging Markets ( -9.27%) MSCI Emerging Markets ( -9.73 %)
Apr Jul Oct
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Source : FE Analytics
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