An “excessive focus” on the macro environment is damaging to investors’ returns, particularly when investing in emerging markets, Philip Saunders, Investec Asset Management’s co-head of multi-asset, has said.
But his colleague John Stopford (pictured), also co-head of multi-asset, asserted that “macro still matters in emerging markets” to investors.
The multi-asset team have been adding to their emerging market exposure for more than a year, with Mr Saunders confirming their allocation to emerging markets has been “creeping up”.
The managers were speaking at an Investec multi-asset briefing when they revealed their divergent views in answer to a question about the impact of US president Donald Trump on emerging markets, with some of his protectionist policies expected to impact the emerging market economies in particular.
Mr Saunders said improved demand for commodities would help regions like Latin America.
Mr Stopford acknowledged there would be “winners” in the short-term from macroeconomic conditions.
“Russia is arguably one place in emerging markets that is a clear winner from [Mr] Trump,” he noted.
He also highlighted Brazil as set to benefit from its recent change in government.
Mr Saunders described how they are “steadily rebuilding” exposure in emerging market equities, favouring that over debt in the Investec Diversified Growth fund.
He observed markets have been “remarkably sanguine” about Mr Trump’s arrival as president of the US, adding populism has gained traction and that people are focused on populism as a risk factor.
But he suggested the “real story” is what the European Central Bank will do next in light of looming European elections, and the impact that any rate rises will have on eurozone equities and bonds.
The team, which includes co-head of multi-asset Michael Spinks, described themselves as “broadly constructive” on equities.
Mr Spinks said within equities valuations in Japan are “relatively attractive”.
eleanor.duncan@ft.com
