Smith & Williamson has launched an emerging markets value fund, to be managed by Richard McGrath.
The Emerging Markets Value fund seeks to achieve long-term capital growth as well as income, by investing in undervalued companies with a strong franchise.
McGrath is based at AGF, a minority shareholder in Smith & Williamson Holdings, which also manages the Smith & Williamson Global Gold and Resources fund.
The fund will hold 50-90 stocks, each with a market capitalisation of at least $500m, and use a proprietary '30/30/30' investment process.
Stocks must have a price to earnings ratio at least 30% lower than that of the relevant index, a dividend yield of at least 30% above the relevant market index, and a price 30% below their 18-month high.
McGrath said: "By using our value approach, we should be able to identify stocks that have short-term difficulties but ultimately have strong core businesses which will drive a recovery in their financial results and share price."
Smith & Williamson marketing and sales head Nick Hodgson said: "Emerging markets may have fallen out of favour with some asset allocators over recent years. However, we feel this presents an opportunity for advisers and we’re confident that AGF’s proprietary system for identifying undervalued companies should generate superior returns over the long term.”
