Jupiter Merlin shakes up emerging markets allocation

Jupiter Merlin has shaken up its allocation to emerging markets in its Growth and Worldwide Portfolios, opening a position in the Invesco Perpetual Asian fund, managed by William Lam.

John Chatfeild-Roberts: Markets peaked in January

The February factsheet shows the fund has been introduced alongside Stewart Investors Asia Pacific Leaders and Findlay Park Latin American.

The Growth portfolio holds 8.1% in Asian and emerging market equities, which represents no change since January, while the Worldwide portfolio holds 14.5%, slightly up from the 14.3% allocation in January, the latest factsheet shows.

Jupiter head of strategy for independent funds John Chatfeild-Roberts, who heads the team that manages the Merlin portfolios, said it has halved its position in the Stewart Investors Asia Pacific Leader fund to initiate the position in Lam’s fund.

The £2.3bn Invesco Perpetual Asian fund has returned 20.3% over one year and 72.2% over three years, compared to 16% and 44.3% respectively in the IA Asia ex-Japan sector. The £8bn Stewart Investors Asia Pacific Leaders fund has returned 5.9% over one year and 29.4% over three years, compared to 4.9% and 25.9% respectively in the IA Specialist sector.

The Invesco Perpetual fund holds 20.4% in China, whereas the Stewart Investors fund, co-managed by David Gait and Sashi Reddy, does not list any mainland Chinese equities in its asset allocation breakdown.

Instead, the Stewart Investors fund, which Chatfeild-Roberts said is a “relatively more expensive portfolio”, has its largest allocation in Indian equities, where it holds 31.3%.

The Invesco Perpetual fund holds 7.9% in Indian equities.

“We are interested to see which does better in a downturn,” he said of the funds. The US dollar could be a headwind for emerging markets if it strengthens in a trickier investment environment, he said.

Chatfeild-Roberts has long advocated investing in regional funds within emerging markets. The emerging markets allocation is now mostly in the two Asian funds with “a little bit” in Findlay Park Latin American, which the team has held since it launched in 2006, he said.

The £1.9bn Merlin Growth portfolio has returned 5.7% over one year and 25.3% over three years, compared to 7% and 22.7% in the IA Flexible Investment sector. The £582.5m Merlin Worldwide portfolio has underperformed the IA Global sector, returning 6.9% over one year and 31.2% over three years, compared to 9.5% and 37.5% respectively in the sector.

The £1.7bn Jupiter Merlin Balanced portfolio holds 5.3% in Asian and emerging markets through Prusik Asian Equity Income, which is managed by Tom Naughton, while the £2.9bn Income portfolio, the largest in the range, holds 2.2% in Asian and emerging markets through Jupiter Asian Income, which is managed by Jason Pidcock. The £51.1m Conservative portfolio does not hold anything in emerging markets.

 

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