Mawer Investment Management has launched its first stand-alone emerging markets fund. The new Mawer Emerging Markets Equity Fund is to be managed by Peter Lampert, CFA, who is also co-manager of the Mawer International Equity Fund.
“We bring Mawer's 'boring' investment approach to these 'exciting' markets,” Lampert said in a company statement. “We focus on large- and small-cap companies with strong business models, excellent management teams, and attractive stock valuations.”
He explained further by discussing three of the fund’s emerging market picks. Speaking to the Globe and Mail
, Lampert said that the firm is underweight in China compared to the MSCI emerging markets index, but is overweight when it comes to India and South Africa.
“There are a lot of state-owned companies in China looking out for government interest more than shareholders,” he said. “Chinese state-owned banks are a large weighting in the [MSCI] index, and we’re not interested at all.”
As for South Africa, Lampert explained that the firm looks for three key pillars: wealth-creating companies, excellent management teams, and attractively valued stocks. “We’ve found a lot of that in South Africa – great management teams operating in a pretty tough environment, with everything from a weak economy with the mining slowdown, to poverty problems,” he said.
“India’s a bit different,” he added. “It has a more positive backdrop with high GDP growth, increasing urbanization, [and] rising labour participation.” Among other companies, the firm plans to invest in LIC Housing Finance, which has benefited from the increasing number of people who can move to cities and afford houses thanks to India’s economic tailwinds.
While Lambert sees emerging-market stocks as attractively priced compared to developed markets, he’s careful not to use broad strokes in picking investment themes. “Emerging markets often follow the same path of development as developed markets did … But we have to be careful to not always make that mental shortcut and assume that emerging markets will always look exactly like developed markets over time.”
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