Smaller companies funds have “led the charge” in the IMA Global Emerging Markets sector over the last year, says Barney Hatt in Investment Week. The best of the bunch is JP Morgan’s Emerging Markets Small Cap Fund. It returned 57.3% in the 12 months to 1 June.
Manager Greg Mattiko has been at the helm since its launch in November 2007. He believes JP Morgan’s presence in emerging markets means he’s “spoilt for choice with regards to the quality of information on a small-cap basis relative to my competitors”. Two stocks that have helped drive the fund’s success are Chinese consumer-related stocks Wumart and Trinity. “These stocks have done very well, partly because when we had the correction in 2008 a lot of these small-cap stocks – particularly the ones listed in Hong Kong – traded at very low valuations. So we added a lot of the high-quality names which we thought were unjustifiably sold off.”
Note this is no fund for widows and orphans. Mattiko’s focus on consumer-related stocks in emerging markets means his success rests on the “potentially frailest layer of any emerging market – domestic demand,” says Juliet Schooling Latter of Chelsea Financial Services in Investment Week. Yet she thinks the fund has potential as “a growing middle class will provide much fertile ground for these type of funds. But investors must brace themselves for a bumpy ride – approach with caution.”
Mattiko and his fund were named as one of the “emerging market stars of 2009” by CityWire, and recent performance has been impressive. Just remember before piling in that the golden investing rule applies here: big returns come with a hefty dose of risk.
Contact: 0800-204020.
JP Morgan Emerging Markets Small Cap Fund top ten holdings
| Name of holding | % of assets |
|---|---|
| Totvs | 1.8 |
| Vanceinfo Technologies Inc | 1.8 |
| Truly International Holdings | 1.7 |
| Concord Medical Services Holdings | 1.6 |
| Radiant Opto-Electronics Corp | 1.6 |
| Yingde Gases Group | 1.6 |
| Indiabulls Financial Services | 1.5 |
| Lamprell Plc | 1.5 |
| Longtop Financial Technologies | 1.5 |
| Turk Ekonomi Bankasi As | 1.5 |