For the year to date, while the first quarter and the start of the third quarter of 2013 have been strong in terms of performance, the second quarter disappointed largely due to the fund’s weighting in financials and a few cyclical stocks it has now sold out of.
Mr Turnbull notes the Chinese economy is undergoing major structural reforms, with demand-side reform seeing a rebalancing from investment growth towards consumption growth, and supply-side reform of the large inefficient state-owned enterprises. The main consequence of these changes will be slower growth.
Mr Turnbull adds: “What it does mean is that the exciting opportunities are getting more exciting, especially because they are getting priced down with everything else. There is not much differentiation in pricing between winners and losers. So I am looking, even more than usual, for long-term, quality structural themes, whether that be in things like healthcare or telcos and the internet and that kind of infrastructure backbone.
“We’ve also been adding to the consumer sector, because we’ve seen through all of these changes that one of the key priorities is to keep consumer growth at a steady rate.”
For investors looking for a research-driven, disciplined process and a strong reputation in managing emerging market money, this fund could be one to consider.
EXPERT VIEW
Ben Willis, investment manager and head of research, Whitechurch Securities:
“Douglas Turnbull follows Neptune’s distinct industry and sector research to identify the areas in which to select stock positions. However, while this approach has seen it just about outperform its sector peer group, since launch it has underperformed its stated benchmark in the same period. Interestingly, Mr Turnbull manages an equity income version of this fund, which offers something different and is worth considering in the current climate.”
