FTAdviser.com

Advertising

Resurgent emerging markets have boosted the T Bailey Growth fund, as the portfolio tries to extract itself from the bottom half of its sector, its manager said lasat week.

Following significant developing market returns over the past few months, the portfolio is overweight Asia Pacific and emerging markets and holds 30 per cent of its positions in related assets.

On March 31, these included 6.2 per cent in a db x-trackers MSCI Emerging Markets ETF, 4.6 per cent in the First State Asia Pacific Leaders fund and 4.3 per cent in the Newton Oriental fund.

Jason Britton, chief executive, said the two regions had "left the developed markets trailing in their wake" following rallies off extremely low valuations.

Over three months to May 5, the MSCI Emerging Markets gained 28.2 per cent, compared with 5.9 per cent for the MSCI World, according to Financial Express.

Despite this, the T Bailey Growth fund was fourth quartile over one year to April 27. Over three years, it has declined by 22.9 per cent compared with 19.8 per cent for the sector.

Mr Britton had particularly high hopes of recovery for Brazil. Advantages included the country's strong fiscal position, economic independence, further room to cut rates and commodity exposure.

"As global demand slows, there will be less of an impact on Brazil than other countries," he said.

He has also placed bets on the Chinese market, where he is using an ETF to gain exposure while he chooses a suitable longer-term manager.

"The two countries in the world that have the fiscal fire power to emerge from the global crisis in better shape for the longer term are the US, benefiting from its current share of global GDP and its currency being the world's preferred reserve, and China, benefiting from its huge reserves and demographics," he said.

To gain US exposure, the chief executive has been using the Legal & General US Index trust, in which he had a 9.9 per cent position on March 31, the Vanguard US Opportunities fund, in which he had a 5.1 per cent holding, and the Martin Currie North America fund, where he had a weighting of 5.6 per cent.

Elsewhere in the developed world, he expressed a "growing preference" this year for the FTSE 250 index, in which he had a 4.6 per cent holding through an iShares ETF. He observed exporters in the mid-cap benchmark had benefited from the run on sterling last year.

In the three months to May 5, the FTSE 250 returned 23.8 per cent compared with 3.9 per cent for the FTSE 100, according to Financial Express.