Gartmore is to place its Emerging Markets fund into its Global Isa product as part of the group's ai...
Gartmore is to place its Emerging Markets fund into its Global Isa product as part of the group's aim to promote the unit trust to IFAs.
The Global Isa product, in which investors can switch between the funds without charge, now has 16 links including the Gartmore European Select Opportunities, Techtornado and American Smaller Companies unit trusts.
Gartmore is planning to supply more information on its Emerging Market fund to IFAs to promote the portfolio.
The fund is ranked second over one year to 4 April, on a bid to bid basis, out of 34 funds in the global emerging markets sector, returning 68.6%.
It is ranked fifth over three years with returns of 22.1%, on bid to offer basis, net income reinvested. Philip Ehrmann, manager of the unit trust, said: "Over the past 12 months emerging markets have generally been more stable and there has been considerable earnings growth."
The economies of regions such as Latin America, Asia and emerging Europe have been undergoing recovery, particularly in Korea and Taiwan where the exports of electronic components are increasing.
Ehrmann said: "Interest in emerging markets has really picked up and there has been a very sharp run-up.
"A lot of people were using year 2000 potential problems as a reason not to invest in emerging markets so now they have rushed in."
While technology, media and telecom stocks have been hurt recently due to the volatility of the Nasdaq index, Ehrmann said the growth potential for these stocks outside the world's most advanced markets is high.
He added: "There are some underowned, relatively cheap companies in these countries compared to the high valuations see in the US.
"There are some telecoms companies on P/E ratios of 22 times, which is good value when you look at the huge potential due to the low market penetration and lack of competitors in the market."
Ehrmann did sell out of some of his technology exposure during the first quarter this year but is now looking to buy back into the sector.
While the market has been volatile of late, he said, there is still earnings growth which can surprise on the upside and be sustained. Ehrmann cited Indian bank ICICI, which floated its private client subsidiary recently.
The subsidiary is based on models similar to recent launches in Portugal and Greece, which were able to take market share rapidly using technology to target clients.
He said: "In Greece it was the Alpha Credit bank, which is now one of the largest private client banks in the country. These types of companies have an enviable rate of growth.
"Indian software companies posted their growth rates at the end of March, showing 80% to 110% growth. This is due to the trend of outsourcing to these countries, so Indian companies are writing computer codes for the West."
Ehrmann is bullish on Mexico, which he sees as likely to continue providing strong growth, as well as Asia, which now has a 6% to 7% annual growth rate.
He is also positive on Brazil where he sees growth recovering from 0% to 3.4% for the year.
While tech and telecoms remain attractive plays for Ehrmann, he is also buying into brewing and beverage stocks which are on attractive valuations having been left behind by the narrow growth market.
To aid regulatory reporting
Three year strategic review
Impact on markets
Has run Cautious Managed fund since 2011
What’s right – not what sells