Jupiter’s Langridge backs specialist financials in EM fund

Jupiter’s Kathryn Langridge is backing specialist financial companies in her £23m Global Emerging Markets fund as she seeks to take advantage of market falls triggered by speculation about US monetary policy.

The manager – who launched the fund three years ago this week – has most recently invested in unsecured loan specialist International Public Finance (IPF) following a visit to the company’s base in Mexico.

The company – which is listed in London and so not a part of the Global Emerging Markets fund’s benchmark – has seen its share price gain 74.6 per cent so far this year in spite of the volatility experienced by many emerging markets.

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While Ms Langridge said IPF had a “high degree of risk” implied by its area of specialism – making unsecured loans direct to small businesses in Mexico and eastern Europe –she argued that the company had “the ability to scale up” and had built up detailed knowledge of its customer base. “IPF is lending to people who have no other ability to get credit but who are running real businesses,” Ms Langridge said.

“It has spent 10 years building up a detailed understanding of customer behaviour and so it has an incredibly detailed knowledge of who to lend to.”

Elsewhere in the portfolio, the manager highlighted Indian loan provider Housing Development Finance, Peruvian financial services company Credicorp and Mexican bank Banorte as examples of niche or specialist operators in the financial sector.

Since the Global Emerging Markets fund’s launch three years ago, Ms Langridge said she had been investing less in the major emerging economies.

In particular, the manager said Brazilian stocks now accounted for roughly 6 per cent of the portfolio, compared with roughly 18 per cent at launch.

“Companies [in Brazil] are not producing the earnings they should and sectors are not growing in the right way,” she said.

“The macroeconomic environment is also structurally challenged.”

In India, which made up 7.5 per cent of the portfolio according to the fund’s August 31 factsheet, Ms Langridge said that the country’s economy had suffered from “extremely poor crisis management” as well as a weakening currency.

Jupiter launched the Global Emerging Markets fund in November 2010 following Ms Langridge’s hire from Lloyd George Asset Management four months earlier.

Since launch to October 18, the fund gained 0.5 per cent according to FE Analytics.

Although this has underperformed the fund’s MSCI Emerging Markets index benchmark, the fund outperformed the IMA Global Emerging Markets sector’s average loss of 2.2 per cent.

Uncertainty over stimulus leaves emerging markets in the lurch

Stockmarkets in emerging economies have fallen in recent months as investors have reacted to the potential reduction in the US’s economic stimulus programme.

Quantitative easing (QE), or ‘money printing’, has resulted in tens of billions of dollars flooding into emerging markets.

But while this was positive for some markets, in others it may well have created bubbles as asset prices become overinflated.