InvestmentsJun 17 2019

Rathbones' Coombs changes emerging markets strategy

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Rathbones' Coombs changes emerging markets strategy
ByDavid Thorpe

David Coombs, head of multi-asset investments at Rathbones, has said an experience he had in New York has changed the way he invests in emerging markets.

Mr Coombs said he had initially invested in emerging markets through buying the shares of global consumer goods companies as he felt the products of these businesses would be popular with emerging market consumers, who have grown wealthy enough to be able to afford such products over recent decades.

But a meeting with one such company changed the way he thought about these investments.

Mr Coombs and his colleagues on the multi-asset desk at Rathbones manage £1.2bn.

He said: "I was in a meeting with Proctor and Gamble in New York and they told me they were having trouble selling a brand of premium shampoo there. So they decided to put the price up.

"When we left the meeting, we sold all of our shares in that company. This is because the products people want in their shampoo in China are different, and it's a big enough market that they can buy the shampoo they want.

"That meeting taught me a lot about emerging markets, and now we prefer to invest directly in companies in the emerging markets directly."

In contrast, Mr Coombs is very skeptical of the investment case for the UK and for Europe.

He said: "We have basically no exposure to the UK economy, and well, the European economy, every time you think it can’t get any worse, it does."

Fahad Kamal, chief market strategist at Kleinwort Hambros, said he was a long-term fan of investing in emerging markets as population and productivity growth in those economies far exceeds growth rates in the developed world, so, in time, emerging market investments should perform better.