GEM stars cut defensives as buyers raise performance fears

A number of global emerging market fund managers have been cutting exposure to the defensive consumer staples sector, as fund buyers warn their positioning has damaged performance.

Mark Harris (pictured), multi-manager at City Financial, attributes GEM funds’ recent period of lacklustre performance to the fact too many portfolios in the IMA Global Emerging Markets sector have been overly exposed to defensives.  On a three-year view, it is one of the worst performing IMA sectors, returning 7.2% to 12 April, according to Morningstar. Harris said he has become so worried about the sector’s performance relative to developed market funds, he has changed his approach to investing in the area. “I have reassessed the drivers of EMs and I feel, after the recent spell ...