Talking Point  

Artemis's Edelsten avoids emerging markets amid pandemic

Artemis's Edelsten avoids emerging markets amid pandemic

The rally in global equity markets since the lowpoint in March means now is the time to avoid emerging market investments, according to Simon Edelsten, global equity fund manager at Artemis.

Mr Edelsten and his colleagues manage about £530m via the Artemis Global Select fund, and the Mid Wynd investment trust. 

The Global select fund has returned 6 per cent in 2020, compared with 2 per cent for the average fund in the sector in the same time period. 

Mr Edelsten said he believes in the current market conditions, investors should stick with “safety first” after such a deep rally in equity markets  “and that means large quality companies in developed markets.”   

The fund manager added: “China is recovering having dealt firmly with the virus and South East Asian economies generally seem fair.

"Valuations are attractive in Japan and Korea so we have invested there. We are slightly wary of governance issues in China and the grey lines between public companies and the state.

"Latin America and Russia, in contrast, are finding the virus hard to contain and lockdown is often impractical in LatAm. All these also suffer from having oil and mining exports hit by the global slowdown. We have no holdings in those regions.”

Mike Bell, market strategist at JP Morgan Asset Management, says market conditions are such that taking a risk on certain asset classes is not prudent.

He said: “While the policy response has been commendable, we believe the market’s expectations of the shape of the recovery is potentially too optimistic.

"Chief among our concerns is that the virus itself may linger and some need for social distancing will remain, particularly in the US and parts of the emerging world.” 

Mr Bell added: “In our view, in order to navigate a quarter filled with known unknowns, it probably makes sense to construct a balanced portfolio, diversified across geographies and asset classes, focusing on flexible strategies with a quality bias, that can cope well in periods of market volatility.”

david.thorpe@ft.com