T Bailey gets its coat as it quits Brazilian party

Boutique fund manager T Bailey has pulled out of Brazil, claiming it is leaving the investment party early to "avoid the worst of the hangovers".

The move will affect its fund of funds Growth offering, which has beaten the MSCI Global Emerging Markets index by more than 20 per cent.

The decision comes as a wave of fund managers pour money into emerging and frontier markets, amid global instability in the developed markets following the past nine months' credit volatility.

On 30 April, Brazil was upgraded to investment grade status, meaning that the stock market surged, while its debt was re-priced and companies based there looked forward to raising more capital at a cheaper price.

Explaining why the fund of funds, which invested directly into Brazil through the iShares Brazil ETF, was pulling out, Jason Britton, fund manager for T Bailey, said: "We think everything is already factored into the price. Performance has benefited from the move to investment grade status as well as euphoria around the as yet unproven oilfield find off the Brazilian coast. We are still long-term advocates of Brazil, but sense that performance is a little ahead of itself now.

"It is always best to leave the party slightly early to avoid the worst of the hangovers."

Replacing the Growth Fund’s holding in Brazil is the M&G Global Basics fund.

The top ten holdings in the Growth fund, as of May 2008, were the Aegon UK Opportunities, JOHambro UK Opportunities, Legal & General European Index, Standard Life Equity Unconstrained Fund and the Martin Currie North America funds.