New economies attract unit trust

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The Independent Online
STEWART Ivory has launched the latest fund to invest in the expanding economies of Asia and Latin America.

The Stewart Ivory Emerging Markets Fund is a unit trust aimed mainly at professional investors but also accepting cash from private individuals.

The minimum investment is pounds 5,000 and there is a 1 per cent discount on the offer price until 10 January. The initial charge is 5 per cent and the annual fee 1.25 per cent.

The trust plans to put 60 per cent into Asian markets and 35 per cent into Latin America.

Angus Tulloch, who will lead the team of fund managers on the new trust, is enthusiastic about Korea, Sri Lanka and Brazil at present.

Stewart Ivory says stock markets in emerging economies, defined as countries that are not part of the Organisation for Economic Co-operation and Development, account for only 6 per cent of world market capitalisation. But between 1980 and 1991 the total capitalisation of the 20 largest increased seven-fold.

There are now several unit trusts specialising in these markets. According to a survey by Money Management magazine, over the year to 1 July the average loss in the four emerging market unit trusts surveyed was 10.4 per cent. But the average loss in the FT-A World Index was 13.7 per cent. The average profit in the unit trusts over four years was 11 per cent.

Investment trusts seemed to fare better, with the average profit among four emerging market specialists over the year to the beginning of July being 9.3 per cent. Shares in Templeton's Emerging Markets trust rose more than 30 per cent.

Mark Mobius, the Templeton fund's Hong Kong-based manager, was in London last week. Mr Mobius seeks out markets where the immediate outlook is poor because this is when shares will usually be cheapest. Like Mr Tulloch, he likes the look of Brazil but also Turkey - 'another basket- case' - and Indonesia.

Hong Kong was one of Mr Mobius's favoured markets until earlier this year. He has reduced holdings there to 5 per cent of the fund's total portfolio, although he is ready to go back in when it looks cheaper.

India also has some attractions but the government's position on capital gains tax for foreign investors is too unclear for Mr Mobius's taste and there are also technical problems in buying into the market.

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