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.
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.
Since the idea of “tapering” of QE was first mentioned in May, benchmarks such as the MSCI Indonesia and MSCI Thailand indices have fallen significantly, while in contrast the S&P 500 index has risen 6 per cent in the same period.
“Emerging markets should have been seen in a more positive light because of tapering,” says Jupiter’s Kathryn Langridge, manager of the Global Emerging Markets fund.
“The US economy is beginning to pick up and you would expect exporting companies to benefit.
“Stabilisation and an improved outlook for the US could lead to higher interest rates but it could also be read as a positive for externally facing companies.”
Three stocks Kathryn Langridge is backing
Sands China
This company is the owner of leading casinos in the burgeoning resort of Macau off the coast of southern China. Ms Langridge said the company is benefiting from continuing investment in infrastructure in this area, improving transport links and increasing amounts of tourists travelling to Macau. At the end of August, this was a 3 per cent position in the Global Emerging Markets fund, according to its factsheet.
Pegasus Airlines
The Turkish low-cost airline is one which Ms Langridge likens to an early-stage Ryanair. Since its listing in April this year, the company’s share price has more than doubled in spite of current political tensions overshadowing the environment in Turkey. Ms Langridge is confident the airline can continue to tap into a growing central European flight network.
Samsung Electronics
The mobile phone and consumer electronics manufacturer has emerged as the leading rival to Apple in recent years. Ms Langridge has made the firm her top holding at 4.6 per cent of the fund at the end of August, citing the firm’s “astonishing” achievements in brand-building and competitiveness in spite of the traditional complexity and opacity of Korean company structures.
