Sticking with good quality, steady companies

“The demographics in emerging markets are attractive and that leads us to being overweight consumer companies,” she adds. “It is through them that you capture the strong domestic growth in emerging markets.”

This positive stance on the consumer means the fund is fairly heavily exposed to emerging market financials, particularly the retail banks which have pricing power and are in a position to capture domestic market growth.

“The vast majority of these banks had no exposure to the toxic issues affecting the developed markets,” says Ms Irvine. “However, we have done a huge amount of additional work to learn from the mistakes and make sure something similar does not happen.”

The fund also has exposure to some cyclical industries, such as those involved in materials, energy and industrials. “We are structurally underweight these areas because we believe these companies largely suffer from a lack of discipline,” she adds. “They do not have pricing power and cannot differentiate themselves.”

When the team decides to invest in these areas it does so through best-in-class companies with strong balance sheets and good capital discipline. An example is Brazilian iron ore producer CVRD. “It has huge reserves and is a low cost producer,” she explains. “We have been taking profits because the stock has done so well.”

The team’s careful approach to stock selection means that turnover is low. “It is less than 20 per cent,” she says. “The average holding period is five years and some stocks have been there for 10 years.”

Taking profits is also a key part of the investment process.

“If a stock over-delivers and gets too expensive we top slice on the basis that its valuation may fall,” she adds. “We will then look to pick it back up again. Typically we will take profits three or four times before we actually sell.”

The amount of cash held has risen slightly over the past few months which provides the team with a degree of flexibility to take advantage of opportunities arising due to market place volatility. However, it will never be more than 5 per cent of assets.

Aberdeen’s emerging markets team may be concerned about the financial problems around the world and how these are likely to affect exporters, but it remains confident the key to tackling these issues is buying quality stocks.

“It is obviously a riskier asset class but on a relative basis it is more attractive than investing in equities in the West,” insists Ms Irvine. “However, even if economies are in for a tougher time I still believe our portfolio will hold up well because of the strength of the companies in which we invest.”

Rob Griffin is a freelance journalist