RWC take contrarian punt on emerging markets

RWC is due to launch its first emerging market Ucits fund for UK retail investors in November this year.

The long-only fund, called RWC Global Emerging Markets Equity Fund, will be managed by John Malloy and James Johnstone, who have worked together for more than 20 years and head the firm’s 15-strong Global Emerging Market team – which joined from Everest Capital earlier this year.

The product announcement comes at a time of heightened volatility within emerging markets amid the fallout of the Chinese stock market correction.

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Mr Malloy said: “Personally I’ve been investing in GEM for more than 20 years and over that time you learn that these things happen, but the key is to focus on the opportunity rather than the noise.”

The product will be a sub fund of the investment firm’s Ucits range which accounts for just under half of the company’s total US$11.4bn (£7.35bn) of assets under management.

The fund will invest across both emerging and frontier markets, with a focus on companies exhibiting strong growth characteristics that are not yet reflected in the share price, according to RWC.

Provider view

Dan Mannix, chief executive officer of RWC Partners, said: “Inevitably, the focus of this launch will be on the contrarian timing given the high levels of volatility seen in recent months. In fact it should be seen as a long-term opportunity to invest in exciting companies with a market-leading equity team. The rate of growth of this team over the past two months exemplifies that there are a large number of investors who have the duration to look through these periods of volatility and need to have continuous exposure to the Global Emerging Markets.

“The Ucits space has been dominated in recent years by highly successful franchises of two or three emerging market teams. Given the difficulty of establishing fully formed GEM teams it has been incredibly hard for new entrants to compete. The massive increase in allocations to the asset class over the past 10 years has meant investors are looking further afield but the options remain limited.”

Adviser view

Kim Barrett, chartered financial planner at Hertfordshire-based Barretts Financial Solutions, said: “Just because things are volatile at the moment it does not mean this will always be the case. Investments in emerging markets at a time where prices are low, could prove to be a fantastic opportunity for investors. Unlike in 2008, we are not seeing anything fundamental that points towards a recession. The fall in emerging markets have been triggered by what is happening in China.”

“The product fee of 90bps seems to be the going rate at the moment. Many fund houses have increased their charges which is quite bizarre – considering that a lot of people have predicted that fund charges are likely to head in the opposite direction.”

Charges AMC of 0.90 per cent. No performance fee.