Credit Suisse and Carmignac launch emerging markets fund

Credit Suisse and Carmignac have launched an emerging markets multi-asset fund.

The co-managed fund is aimed at providing investors with well-diversified exposure to emerging markets which the companies state have been a key market driver since last year.

According to Credit Suisse experts, these markets offer further potential in 2018 and beyond and the structural picture of emerging markets remains positive.

This is because, according to the company, they account for more than 80 per cent of the global population, with mostly favorable demographics, and account for around 60 per cent of global economic growth.

In addition to a general appetite for riskier assets by investors, emerging markets benefited from improving fundamentals.

Credit Suisse said it expects this trend to continue and in turn offer a broad range of investment opportunities.

But despite the significant potential of emerging markets, many investors struggle to find a suitable investment approach to access these markets.

This is because they are highly diverse, spanning four continents and numerous currencies.

Emerging markets also carry "a very interesting" premium across asset classes but so far, it has been difficult for investors to collect these premiums in a risk controlled way.

Given these constraints, one particularly attractive way to invest in emerging markets is to combine investments in debt and equity markets, according to Credit Suisse.

Provider view:

Michael Strobaek, global chief investment officer at Credit Suisse, said: “Emerging market winners is one of Credit Suisse’s five investment themes for 2018. We view emerging markets as a key part of a professional strategic asset allocation, best approached via actively managed solutions."

Mr Strobaek described Carmignac as "a pioneer investor in emerging markets with a differentiating risk management focus" which he said would help manage the emerging markets multi-asset class fund.

Maxime Carmignac, member of the board of directors at Carmignac, said: “As an independent and family-owned business, we are excited to take our strong relationship with Credit Suisse to the next level with this key investment case in emerging markets.

“Since our inception 30 years ago, we have invested in emerging markets based on convictions and risk management through the years. We are pleased to bring our expertise to this innovative solution.”

Adviser view:

Dennis Hall, managing director at Yellowtail Financial Planning, said: “Nothing about this fund stands out to me, except the charges. There’s a hefty 1.5 per cent annual management charge and the estimated ongoing charge rises to 1.84 per cent.

“By the time all charges are accounted for, there’s a fairly high bar to clear before investors make a return. We’ve seen the rise and fall of multi-asset investing previously, and again, nothing about this fund stands out for me. Whatever extra the managers say they’ll add to the portfolio, it’s not working yet, as the fund performance lags the benchmark. The active versus passive debate aside, it’s not a fund I’ll be recommending.”