Mr Kirkman, who runs the £178m Global Consumer Trends fund, said investor fear surrounding emerging markets had “de-rated global franchises” with an emerging market bias, including stocks such as bank Standard Chartered, as well as business based in developing economies.
The manager said he had recently added to Indian banks across both of his global equity portfolios to take advantage of volatility in the country’s stockmarket this year and the slump in the rupee.
“Everybody hates them and share prices are very weak,” he said.
“India’s banking system has low levels of penetration. It is an exciting structural story. Whenever I have bought in to these big dips, I make money – they are big dips, but big opportunities.”
The fund has experienced mixed performance and is third quartile in one year, fourth quartile in three years and top quartile in five years.
While Mr Kirkman acknowledged that emerging markets had gone though a “sustained period of doing poorly” which had been “really painful” for the portfolio, he was absolutely committed to the long-term growth story.
Mr Kirkman, who is now also the sole manager on the £165.4m Global Equity fund after Gary Clarke left the group last month, said he was not as positive on the US as other investors and at the end of September had a 12.6 per cent underweight in the region, compared with the MSCI All Country World index.
“It has been a fantastic 12 months for equities, but that is down to a lot of re-rating,” he said.
“The private and consumer sectors [in the US] are still rebuilding their balance sheets and unemployment is still reasonably high.”
He added that he thought the longer there was a delay by the Federal Reserve in reducing the size of its asset purchase programme, known as quantitative easing, it “could show a lack of confidence” in the underlying economy.
He added that the housing market was “pretty fully valued” and that growth in the sector had been driven by investment rather than people actually buying homes.
He said he was still positive on China, in spite of the negative sentiment surrounding emerging markets, and had a 5.9 per cent overweight in the region.
“The data out of China has been much more subtle this year than the markets and media have given them credit for – real income is growing,” he said.
The fund gains exposure to growth in disposable income through investments such as Macau’s casinos, which recorded record revenues in October.
Mr Kirkman noted that while emerging market consumption still looked promising, spending patterns were changing, with luxury sales now stronger in Europe than in China.
In one year the Global Equity fund is in line with the benchmark rising 21.9 per cent compared to 22 per cent for the MSCI All County World index, although in three and five years it has underperformed.
Backing China’s transition to a consumption-led economy
Peter Kirkman, JPMorgan Asset Management’s global equities manager, said of all the emerging markets: “I am the most positive about China”.
He argued that while Chinese growth has slowed, this was a natural part of a country’s economic cycle, and that structural reforms, while slow moving, were a positive step.
China’s economic rebalancing is an epic project. The boom in activity that made it the world’s newest superpower was largely driven by infrastructure that has proved an unsustainable growth model.
The Chinese government is now trying to shift the economy towards consumption, fuelled by an increase in disposable income and a stronger renminbi.
GDP growth in the third quarter suggested the country was on its way to achieving this, recording a 7.7 per cent annualised expansion , which was more angled towards the consumer growth in Q3, with a greater proportion driven by consumption than before.
