Nedgroup Investments' Beattie: Decline in US currency 'icing on the cake' of a bullish EM scenario
How have emerging markets dealt with the pandemic?
Ian Beattie, lead portfolio manager of Nedgroup Investments' Emerging Markets Equity fund, talks to Investment Week about China, Covid-19 and asset allocation during crises.
What changes have there been to your portfolio positioning in light of this?
We have been adjusting our EM portfolio strategy to reflect recent monetary developments, increasing exposure to cyclical markets, sectors and stocks while maintaining an emphasis on solid balance sheets and sustainable earnings growth.
Markets that typically outperform in strong global economic upswings include Russia, Indonesia, Brazil and Korea.
Has your fundamental investment philosophy changed in any way because of this crisis?
We retain our focus on high quality, high ROIC companies and, as always, we continue to look for bargains in quality and growth companies.
We believe that having a consistent approach is the key to long-term outperformance, and while we prefer to have outperformance on a positive nominal number, we were on the right side of the index with performance at -6.2% versus the MSCI Emerging Markets Index return of -12.0% for the year to 30 April.
What advice would you give to other investors out there?
We advise monitoring global broad money data closely - a medium-term return of inflation implied by continued strength would have profound investment implications, including a possible value comeback for which an EM overweight could act as a good hedge.
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