InvestmentsApr 2 2015

100 Club: African buys reflect shift at Henderson

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100 Club: African buys reflect shift at Henderson

Ian Warmerdam is ramping up the emerging markets exposure of his Henderson Global Growth fund following his firm’s recruitment of former First State Investments senior portfolio manager Glen Finegan.

Mr Finegan joined Henderson as head of emerging market equities in January, following more than a decade at his former employer.

Global growth equities director Mr Warmerdam has wasted no time in using Mr Finegan’s expertise to overhaul the fund’s exposure to emerging markets.

Mr Warmerdam said he had “tweaked” one of the themes on his fund from a focus on global brands looking to expand into emerging markets to a broader focus on emerging market growth.

The manager has bought into several new stocks, including Shoprite, a South African food retailer with supermarkets across sub-Saharan Africa; PZ Cussons, a UK-based health and personal care company that has a high exposure to African markets; and Tiger Brands, a South Africa-based packaged goods company.

Mr Warmerdam said investors should expect him to be increasing his exposure “to companies that benefit from emerging market growth” in the future, both through companies domiciled in emerging markets and international comp­anies with substantial exposure to the region. He said, for instance, he was looking at a financials company in eastern Europe as a potential buy.

The significant growth potential from an expanding middle class and rises in disposable income in emerging markets was a theme that became almost ubiquitous at times in the past decade, Mr Warmerdam said.

But, he added, the hype around such a strategy had faded somewhat given the disappointing economic performance throughout many emerging market countries in the past few years.

Mr Warmerdam acknowledged there had been “some economic weakness in emerging markets [and] the region has not performed very well”, but he said this weakness had also created an opportunity to buy into companies more cheaply.

“The growth in consumers and wealth in emerging markets offers significant potential, especially after a number of years of weakness,” the manager said.

The growth in consumption in emerging markets has been one of the key focus points for First State, throughout its emerging market, Asia Pacific and global equity funds, and Mr Finegan seems to have brought that focus to bear in his new role.

The Henderson Global Growth fund’s move into emerging markets has been funded in part by a reduction in its exposure to US equities.

Mr Warmerdam said his weighting towards the US had been as high as 65 per cent of the fund last year but was now down to 55 per cent.

The manager said such a reduction was not a bearish call on the US but simply came about because he “tended to find some stocks reached their pricing target in the US” following an extensive rally in the equity market.

He said there was now more “relative value” to be found in emerging markets and, to some extent, Europe.

Henderson Global Growth fund

Ian Warmerdam

Size £372.8m

Benchmark: MSCI AC World index

1-year performance:

Fund: 24.5%

Benchmark: 19.6%

3-year performance:

Fund: 55.2%

Benchmark: 44.9%

5-year performance:

Fund: 84.7%

Benchmark: 55.8%

JOHCM Global Select fund

Christopher Lees and Nudgem Richyal

Size £1.8bn

Benchmark: MSCI AC World index

1-year performance:

Fund: 27.9%

Benchmark: 19.6%

3-year performance:

Fund: 71.1%

Benchmark: 44.9%

5-year performance:

Fund: 98.3%

Benchmark: 55.8%

Scottish Mortgage Investment Trust

James Anderson and Tom Slater

Size: £3.2bn

Benchmark: FTSE All World index

1-year performance:

Fund: 29.9%

Benchmark: 20.4%

3-year performance:

Fund: 91.5%

Benchmark: 47.7%

5-year performance:

Fund: 133.9%

Benchmark: 59.7%

Standard Life Investments Global Equity Unconstrained fund

Mikhail Zverev

Size: £182m

Benchmark: IA Global sector

1-year performance:

Fund: 14.2%

Benchmark: 15%

3-year performance:

Fund: 50.6%

Benchmark: 38.2%

5-year performance:

Fund: 71.9%

Benchmark: 46.7%

Witan Investment Trust

Andrew Bell

Size: £1.3bn

Benchmark: MSCI AC World index

1-year performance:

Fund: 20.7%

Benchmark: 19.6%

3-year performance:

Fund: 76.7%

Benchmark: 44.9%

5-year performance:

Fund: 92%

Benchmark: 55.8%