Allianz Global Investors’ flagship Bric Stars fund is set to increase the amount of money it invests in countries outside the fund’s core markets of Brazil, Russia, India and China.
Manager Kunal Ghosh - who took on the fund at the beginning of this month following previous manager Michael Konstantinov’s departure - said he plans to make more use of the £326.6m fund’s ability to invest up to a third in markets outside of the Brics.
“We are going to use the non-Bric capability significantly more as values dictate,” Mr Ghosh said. “For example, we don’t need to be in China to exploit the opportunities in the Chinese consumer space.”
The manager said he had bought into Korean car makers Kia and Hyundai in a bid to benefit from increasing car sales in China, as Chinese-listed car manufacturers were not good enough to take advantage of this trend.
Similarly, Mr Ghosh has established a position in Catcher Technology, which makes casings for smartphones and tablet computers, in order to benefit from the “craze” for smartphones in China.
Elsewhere he has reduced positions in Brazilian commodities giants Vale and Petrobras, which were significant holdings in the portfolio under Mr Konstantinov.
Mr Ghosh described the Brazilian economy as a “conundrum” and criticised its failure to capitalise on the sporting events it is duo to host in the coming years. He said that between 2005 and 2013 no new hotels had been built in spite of the country hosting next year’s football World Cup and the 2016 Summer Olympics.
Mr Ghosh said: “The socialist president has been focused on nationalising assets [including Petrobras].
“Petrobras is now the most indebted company in the world. Commodity prices are going to be weak for a long time and the US is becoming a net exporter of energy, so what Brazil offers the rest of the world is much less.”
The manager has built up a new holding in Cielo, which provides the technology behind the majority of credit and debit card transactions in the country.
“Cielo has a monopoly so it is a good proxy for the retail sector without the risk of margins being squeezed,” the manager said.
Meanwhile Mr Ghosh has also altered the fund’s focus on India to invest in companies which can perform in spite of the weakness of the rupee. He has sold down domestic focused stocks in favour of exporters such as Tata Group.
Under Mr Konstantinov the Bric Stars fund gained 17.3 per cent in the five years to the end of September, according to FE Analytics, but this lagged the fund’s MSCI Bric index benchmark which rose by 34.4 per cent.