Ben Yearsley: Developing nations will need West's expertise

The Analyst

One of the most enjoyable aspects about working at Hargreaves Lansdown is getting to meet such a wide variety of fund managers. Of course, not all of them are worth investing in. Unfortunately some can't cut the mustard, and others run funds unsuitable for our clients. What is most exciting, though, is uncovering a relatively unknown manager at one of the smaller groups with a truly interesting fund. A prime example is the JM Finn Global Opportunities Fund managed by Anthony Eaton.

This is very much a "big picture", thematic fund, and the theme in question is relatively straightforward. Mr Eaton invests in companies set to benefit from global industrialisation and urbanisation. He believes demand for energy, infrastructure and commodities will be substantial in order for the developed world to maintain current levels of consumption. Add to this the rapid progress of developing nations (such as China, Brazil and India) and you have huge strain placed on the world's resources. This, he believes, will benefit firms able to supply the essential raw materials, goods and services that accompany urbanisation and economic growth.

You could in theory build exposure to this theme by combining infrastructure, commodities, emerging markets and energy funds. However, JM Finn Global Opportunities does it neatly for you and contains a diverse range of holdings, 165 in total. Rather than narrow the field down further, Mr Eaton takes the view that it is not worth trying to outsmart the market. Instead he prefers to reduce stock-specific risk and ensure his portfolio is well placed overall to benefit from the theme that he feels will dominate the investment world for the next decade.

This doesn't mean he thinks stock selection is irrelevant. In fact he places great emphasis on meeting company management and spends a lot of time travelling to visit firms in many different countries. For instance, he has recently returned from the Ukraine where he was seeing, among others, the management teams of 300,000-hectare farms. I have to be entirely honest and say I have no idea how big a 300,000 hectare farm is, but I'm guessing it is pretty large! The important point here is scale: the Soviet bureaucracy had many faults, but the decision to create huge farms has left the agricultural infrastructure in the former Soviet bloc at a competitive advantage to many farmers in developed Europe.

The core of the fund is based on commodity producers, infrastructure and industrials. You might think this makes it rather risky and, admittedly, it is entirely reliant on the world's economic growth. As such it had a poor year in 2008 when fears of global recession gripped the markets. However, there are also some more defensive, consumer names such as Coca-Cola and Colgate-Palmolive, who Mr Eaton believes will be beneficiaries of increased discretionary spending in emerging nations. Additionally, the majority of the holdings are large and liquid investments, many of which are essential kit for the industrial world and attractive global assets. Indeed Mr Eaton thinks a number of his holdings could be the subject of merger and acquisition activity in coming years, as China in particular looks to snap up some of these trophy assets.

In the Western world we take the basics of roads, railways and power for granted. Yet these are still aspirations for billions of people across the developing world. So too are the luxuries in life such as LCD TVs, mobile phones and fast cars. There has been a definite shift in wealth and power over the last two or three years as the credit crunch has hurt the West and countries such as China have become wealthier. However, many developing countries still need the expertise, resources, and products of long-established companies here in the West, and this fund is positioned to take advantage. If you are looking for a higher-risk, long-term holding, this could well fit the bill.

For more details about the funds included in this column, visit www.h-l.co.uk/independent

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

PROMOTED VIDEO
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Software Development Manager

    £40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

    Ashdown Group: Product Manager - (Product Marketing, Financial Services)

    £30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

    Recruitment Genius: Compliance Assistant

    £13000 per annum: Recruitment Genius: This Pension Specialist was established ...

    Ashdown Group: Market Research Executive

    £23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

    Day In a Page

    As in 1942, Germany must show restraint over Greece

    As in 1942, Germany must show restraint over Greece

    Mussolini tried to warn his ally of the danger of bringing the country to its knees. So should we, says Patrick Cockburn
    Britain's widening poverty gap should be causing outrage at the start of the election campaign

    The short stroll that should be our walk of shame

    Courting the global elite has failed to benefit Britain, as the vast disparity in wealth on display in the capital shows
    Homeless Veterans appeal: The rise of the working poor: when having a job cannot prevent poverty

    Homeless Veterans appeal

    The rise of the working poor: when having a job cannot prevent poverty
    Prince Charles the saviour of the nation? A new book highlights concerns about how political he will be when he eventually becomes king

    Prince Charles the saviour of the nation?

    A new book highlights concerns about how political he will be when he eventually becomes king
    How books can defeat Isis: Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad

    How books can defeat Isis

    Patrick Cockburn was able to update his agenda-setting 'The Rise of Islamic State' while under attack in Baghdad
    Judith Hackitt: The myths of elf 'n' safety

    Judith Hackitt: The myths of elf 'n' safety

    She may be in charge of minimising our risks of injury, but the chair of the Health and Safety Executive still wants children to be able to hurt themselves
    The open loathing between Barack Obama and Benjamin Netanyahu just got worse

    The open loathing between Obama and Netanyahu just got worse

    The Israeli PM's relationship with the Obama has always been chilly, but going over the President's head on Iran will do him no favours, says Rupert Cornwell
    French chefs get 'le huff' as nation slips down global cuisine rankings

    French chefs get 'le huff' as nation slips down global cuisine rankings

    Fury at British best restaurants survey sees French magazine produce a rival list
    Star choreographer Matthew Bourne gives young carers a chance to perform at Sadler's Wells

    Young carers to make dance debut

    What happened when superstar choreographer Matthew Bourne encouraged 27 teenage carers to think about themselves for once?
    Design Council's 70th anniversary: Four of the most intriguing prototypes from Ones to Watch

    Design Council's 70th anniversary

    Four of the most intriguing prototypes from Ones to Watch
    Dame Harriet Walter: The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment

    Dame Harriet Walter interview

    The actress on learning what it is to age, plastic surgery, and her unease at being honoured by the establishment
    Art should not be a slave to the ideas driving it

    Art should not be a slave to the ideas driving it

    Critics of Tom Stoppard's new play seem to agree that cerebral can never trump character, says DJ Taylor
    Bill Granger recipes: Our chef's winter salads will make you feel energised through February

    Bill Granger's winter salads

    Salads aren't just a bit on the side, says our chef - their crunch, colour and natural goodness are perfect for a midwinter pick-me-up
    England vs Wales: Cool head George Ford ready to put out dragon fire

    George Ford: Cool head ready to put out dragon fire

    No 10’s calmness under pressure will be key for England in Cardiff
    Michael Calvin: Time for Old Firm to put aside bigotry and forge new links

    Michael Calvin's Last Word

    Time for Old Firm to put aside bigotry and forge new links