By Jenne Mannion The Allianz RCM Bric Star fund has been awarded an A rating from Standard & Poor...
By Jenne Mannion
The Allianz RCM Bric Star fund has been awarded an A rating from Standard & Poor's, just seven months after launch.
The fund is managed by Michael Konstantinov and his team, who choose stocks that are set to benefit from the emergence of the Brazilian, Russian, Indian and Chinese (Bric) economies.
Over the seven months from 27 February to 25 September 2006, the fund is ranked first of 30 funds in the global emerging markets sector after delivering an 0.43% return, compared to the sector average of -8.19%, on a bid-to-bid basis, according to Standard & Poor's.
Speaking at the International Investment Channel Islands Forum, Konstantinov said unlike other emerging markets, the Bric countries have in place the fundamental conditions to be economic superpowers. That includes high economic growth rates (5%-10% pa) and large populations (45% of the world's population). Furthermore, there is increasing economic interaction between the countries, and the conditions necessary for these growth rates to be sustained over time.
All these factors contribute to the Bric countries being the great growth story of the 21st century. Konstantinov cited Goldman Sachs research, which said Brics could be larger than the G6 within 40 years. In 2050, Goldman Sachs said China could be the largest economy in the world, with US second and India third. Brazil and Russia would then be ranked fifth and sixth, after Japan in fourth place.
Bric currencies could also appreciate by close to 300%. Konstaninov said the currencies in China could appreciate by 289%, India by 281%, Russia by 208% and Brazil by 129%.
Each country has its own economic strengths and advantages that complement each other. Brazil is one of the largest commodity exporters in the world with the largest supply of iron, copper and nickel. Cocoa, coffee and soya beans are exported worldwide. A rising domestic consumption and a favourable demographic (average age of 27.4 years) is another feature.
Russia offers the world's largest supply of natural gas (28% of world supply and around 15% of the word's crude oil reserves). The country has rising domestic consumption thanks to rapid expansion of the middle class.
India is the centre of world business outsourcing, in particular IT and service sectors, due to its highly qualified, English speaking workforce and minimal staff costs. India is also the world's most important generic drug producer. Domestically, there is a large population of over one billion and favourable demographics (64% of the population is under 29).
China is currently the most attractive region for foreign direct investment - in 2004 $60bn was invested - and has access to the world's most important markets, since its entry to the World Trade Organisation. Its population of more than 1.3 billion means the country is less dependent on global demand, he said. key points
Allianz Bric Star fund has been awarded an A rating
The fund is ranked first in the global emerging markets sector
Goldman Sachs research stated China would be the largest economy in the world by 2050
Clarke replacing Balkham
'Deep-dive analysis of client behaviour'
Ways to mitigate April’s increases
The best equity income funds examined