Fund of the week: Buy the leaders in emerging markets

published 1 November 2011

Despite the falls seen across emerging markets in September, Jonathan Asante, manager of the First State Global Emerging Markets Leaders fund, has remained confident. "The fund is defensively positioned, invested in businesses with quality franchises and managements with strong track records."

The fund's cumulative performance of 67% over three years is a boon for Asante, who took over as the fund's lead manager two years ago. That job was previously held by star manager Angus Tulloch. The fund has returned nearly double that of its emerging markets benchmark, which posted a 36% gain over the same period.

Long-term capital growth is the key goal for the fund, which invests in large or mid-cap companies across emerging economies. Over half of the fund is invested in emerging Asian countries, followed by 25% in Europe, the Middle East and Africa. Consumer staples is the prominent industrial category, followed by telecom services, IT and financials. In September, Asante bought shares in Anglo American close to its book value, and in China Merchants Holdings, "possibly the best state-owned company in China with attractive port assets".

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"The events in the Middle East and North Africa are a reminder that emerging markets can be volatile, but longer-term prospects remain encouraging," Mark Dampier, head of research at Hargreaves Lansdown, commented earlier this year. Dampier likes companies with strong balance sheets and the ability to pass on rising costs. "In this environment, we think [the managers'] cautious approach should prove rewarding."

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Taiwan Semiconductor	5.1%
Hong Kong & China Gas	4.7%
AngloGold Ashanti	3.6%
Anheuser-Busch	3.6%
Samsung Fire & Marine	3.6%
Hindustan Unilever	3.4%
SABMiller	3.1%
Uni-President Enterprises	3%
E-Mart	3%
Tiger Brands	2.8%

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Emerging Markets LeadersFund top ten holdings