Multi-managerMay 18 2015

Henderson’s McQuaker dips toe in emerging markets

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Henderson’s McQuaker dips toe in emerging markets

The time has come to edge back into emerging markets equities, Henderson multi-manager Bill McQuaker has claimed.

The head of the group’s multi-manager team said he had begun to tactically reduce his underweight to emerging markets through the purchase of an active fund and an exchange-traded fund (ETF).

Mr McQuaker has bought into the £271m JPMorgan Emerging Markets Income fund, run by Richard Titherington and Omar Negyal, as well as adding the iShares MSCI Emerging Markets ETF to his portfolio.

The pair bring Mr McQuaker’s exposure to emerging markets up to 4.4 per cent in his £549.1m Multi-Manager Income & Growth fund.

“We wanted a plain-vanilla emerging markets ETF to get some exposure. This way we could sell out quickly if we needed to,” he said.

“Also, ETFs give exposure across the spectrum to stocks that had been hurt in the past three or four years that we expect to start increasing [in price].”

Mr McQuaker noted that active managers could not give him access to niche lower-valued stocks. The tracker also offered him exposure to cyclical areas, such as technology and mining companies.

At the end of April, analysis from advisory firm CrossBorder Capital suggested money was again heading into emerging markets and that the “path of progressively emerging market liquidity is evident”.

At the time, multi-managers such as Old Mutual Global Investors’ John Ventre and F&C Asset Management’s Gary Potter were still cautious about the sector. Mr Potter warned “there have been a lot of false dawns in emerging markets”.

Other investors have raised concerns that emerging markets will be hurt by the strengthening US dollar and by an impending rate rise from the US Federal Reserve.

However, Mr McQuaker is more optimistic and said upping emerging markets exposure worked as part of his general theme of adding more cyclicality to his portfolio, which includes an increased allocation to Europe.

Elsewhere, Mr McQuaker has increased his weighting in Asian stocks, which he said were under-owned and cheap.

His allocation to Asia excluding Japan was at 8.1 per cent at the end of March, according to the latest factsheet.

While the manager has been adding emerging markets equities, his weighting in equities overall is close to neutral.

In his Income & Growth fund, the manager has just 0.8 per cent more in equities than the peer-group average in the IA Mixed Investment 20-60% Shares sector, he said.