Ben Yearsley: Developing nations will need West's expertise
Saturday 26 June 2010
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
sportLiverpool 5 Norwich City 1: Uruguayan striker has now scored 11 league goals against the club
arts + entsOlivier-nominated actor and singer is set to star in Lloyd Webber's musical about the Profumo affair
filmWith more than 70 per cent of early films lost, archivists are scouring the world to preserve the precious examples that remain
sportUnder-10s football coach sacked for telling parents he was 'only interested in winning'
techA piece of new hi-tech kit aims to get us scribbling again
life + styleClarissa Baldwin is the brains behind the slogan 'A Dog is for Life not just for Christmas'
10 tips for taking out a personal loan
Banks are brought to account by switchers as growing number of people expect to be rewarded by their bank
Bargain Hunter: Playmobil plays to the gallery with discounts on its toy range
How to start your own internet business
Five ways to make money on the internet
- 1 The hardwired difference between male and female brains could explain why men are 'better at map reading'
- 2 Is this the scariest advert ever? Japanese tyre commercial comes with its own disclaimer and health warning
- 3 A forgotten episode in Russian history leaves links with the Philippines
- 4 Syrian rebels consider joining forces with regime troops to fight al-Qa’ida
- 5 ‘Put it in my mouth’: Viewers outraged by apparent reference to oral sex in VIP e-cig advert
iJobs Money & Business
£Negotiable: Citifocus: High calibre individual with a strong understanding o...
£50000 per annum: Morgan Hunt: Whilst the Real Estate sector was suffering thi...
£Negotiable: Citifocus: The role will suit a fund product specialist, current...
£75000 - £85000 per annum + Bonus and Benefits : Harrington Starr: An award wi...
Day In a Page
A spacious Grade II-listed family home with annexe and equestrian facilities among four acres of land in Itchingfield
A four-bedroom home with exposed brick walls and open fires in the picturesque village of Northill
A Grade II-listed property with five bedrooms and unique tower, overlooking Hastings Old Town
A charming five-bedroom detached family home, set within half an acre in Kew
A two-bedroom maisonette set on the top two floors of a period building, close to Kentish Town Tube.
Take advantage of the extra space provided by former stables and outbuildings at this five-bedroom farmhouse.
This three-bedroom Victorian terrace is near to Queen’s Road Peckham station, Nunhead station.
A five-bedroom modern house with terrace, swimming pool, Zen treehouse and large carp pond
An unexpected gem with four bedrooms, remarkable vaulted reception and a galleried study area
A five-bedroom house in one of Lymington's most sought after tree lined avenues, moments from the marinas and sailing clubs
A grand early 19th century B&B close to the historic harbour, with four en suite bedrooms
A four-bedroom, 17th century home with walled gardens, a landscaped terrace, cellar and open fires
A six-bedroom house with five bathrooms and four reception rooms spread over 4,000sq ft of luxury living space
A stunning three double-bedroom apartment with two decked terraces in the exclusive gated community, Bromyard House
A 10-bedroom period, family home amid beautiful surroundings in the centre of the Wentworth Estate in Longcross village
A stylish three-bedroom apartment with two bathrooms and private landscaped garden, moments from Fitzroy Square
A Grade II-listed Elizabethan barn with landscaped gardens, exposed elm beams and four bedrooms, all with lovely views
A six-bedroom family home, dating back to 1280 with four reception rooms, barn, swimming pool and tennis courts in Harwell
A spacious two-bedroom flat, refurbished to a very high standard with private landscaped garden, close to Kentish Town station
An exceptional two-bedroom apartment with balcony and underground parking in the centre of Richmond
A one-bedroom, luxury, duplex apartment in the grand landmark building, Imperial Hall
Run a fabulous boutique shop, live above it in a one-bedroom flat and let a second one-bedroom flat that comes part and parcel
A Grade-II listed, thatched cottage in Hundleby village, with five bedrooms, a coach house and three and a half acres
A spacious two-bedroom flat in the heart of Hoxton Square with wooden floors and roof terrace
A five-bedroom family home with stunning pool and gym complex set among two acres of land
A six-bedroom period house with heated swimming pool and a separate two-bedroom annexe cottage in Townlake, £795,000
A spacious and contemporary two-bedroom flat arranged over three floors, with garden patio close to St George Square, £600,000
A one-bedroom flat in a beautiful Regency building opposite the beach in Kemp Town, £190,000
A two-bedroom flat with London skyline views close to Surrey Quays. £395,000.
A seven-storey tower with three bedrooms and a stunning roof terrace. Guide price: £850,000.
A 16-bedroom country pile with nine reception rooms, four self-contained flats and a 13th century Peel Tower. £850,000.
A classic six-bedroom Victorian Manse house 10 miles from Edinburgh. £495,000.
John Lennon's childhood home in Liverpool to be sold at auction. Guide price: £150,000-£250,000.
A six-bedroom detached period property with secluded gardens, ample parking and a double garage in Rye, £675,000.
A large split-level property with three double-bedrooms and roof terrace, close to Crouch End Broadway, £625,000.
A charming barn conversion in the picturesque Cotswold village of Ilmington with three bedrooms, a detached garage, workshop and beautifully manicured gardens £675,000.
A three-bedroom new build, ground-floor flat with two bathrooms, close to Bermondsey tube, £445,000.
A three-bedroom house in an enviable new development moments from Oxshott High Street, with secluded garden and decked area, £385,000
A two-bedroom split-level flat with stunning south-west facing roof terrace in the popular Brondesbury Conservation Area, £549,950.
A charming 16th century, three-bedroom detached house in Bidborough with picturesque garden
A top-floor one-bedroom flat in the heart of Pimlico with a terrace providing spectacular views over London, £495,000.