Fund of the Fortnight: Lazard Emerging Markets
The latest: Lazard Emerging Markets
Emerging markets such as Asia, Latin America, Eastern Europe and Africa have had a torrid time of late on the back of growing concerns about the deceleration of the Chinese economy, its structural imbalances and fears of a brewing credit crisis. Emerging currencies have also been pummelled as international investors have sucked money back to the developed world, borrowing costs have escalated and a host of geo-political events including the crisis over Ukraine and unrest in Thailand have reminded investors that these regions are unstable.
However, long term investors with a stomach for risk should note that emerging markets also account for most of the world’s population and that will drive much higher growth in the long term than the developed world where populations are ageing. Buying at a point of weakness opens up the potential for a bargain, although the short term outlook remains challenging.
For investors prepare to go against the crowd and take this long-term view, the recent sell-off in emerging markets and Asia could present an opportunity. One fund investors may want to consider is Lazard Emerging Markets. The fund takes advantage of the wealth of experience of the Lazard Emerging Markets equity team which has been managing this strategy for almost twenty years.
The fund is run by James Donald who has been with Lazard since 1996 with Rohit Chopra as co-manager. The team of six are fairly conservative in their approach and analyse company business models to determine an initial ‘fair price’. They then discount this price to account for factors such as macro-economic or corporate governance risk. There must be a minimum 25% upside to the price target to be included in the portfolio and stocks are weighted according to their upside potential. This disciplined framework coupled with the experience of the team gives us confidence that that the fund can offer better returns for investors than most of the peer group in this space.
Jason Hollands is a managing director at Bestinvest
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