Brazil, Russia, India and china still attracting foreign investment
There has been a slew of managers investing in Brazil, Russia, India and China (Bric), with both Axa Investment Managers and Goldman Sachs announcing launches.
AXA Investment Managers fund will not only invest in the Bric regions but also Korea. The Axa WF Talents Brick portfolio is Luxembourg domiciled and has a minimum investment of $2,000 (£1142) or euro or sterling equivalent. The annual management charge is 1.75% and the initial fee is up to 5.5%.
There is no benchmark to the fund, but its performance will be compared to the MSCI Emerging Market Free Index. The portfolio will have around 40-60 stocks in it.
Charles Firmin-Didot, is manager of the portfolio. He plans to avoid over-valued or overly fashionable entrepreneurs and is looking for solid businesses with low levels of debt.
He said: "For many years now, Chinese share indicators, made up of numerous state-owned companies, have shown disappointing performance.
"However, companies owned by Chinese entrepreneurs such as advertising company Focus Media and agricultural producer Chaoda, which are ranked among the main positions in the fund, are showing remarkable results."
Goldman Sachs Asset Management (GSAM) has now confirmed it will launch a Bric portfolio as previously reported in International Investment (February, 2006, p10).
The Luxembourg domiciled fund will be available through third party distributors. It is managed by GSAM's emerging markets equity team.
Maria Gordon, co-head of GSAM global emerging markets equity team, said: "Investors should look to the Bric markets for greater return dispersion and higher potential for alpha generation than they typically see in developed markets. China and India with large, increasingly urban populations, are industrialising rapidly and driving unprecedented demand for the commodity and energy exports supplied by Russia and Brazil.
"As the trade relationship between the Bric deepen, they become mutually supportive of each other's growth. These domestic economies are also fuelled by the increasing consumption of the broadening middle class."
Goldman Sachs estimates the number of people with annual income over $3,000 per capita in the Bric's, a key threshold for entry into the middle class, could double in the next three years and reach $800m by 2015.
In the onshore market, Allianz Global investors has also obtained Financial Services Authority approval for the first UK domiciled Bric fund.
The Fund has an initial fee of 4% and an annual management charge of 1.75%. However, a special launch trail commission of 0.75% will apply on minimum investments of £100,000, which are invested into the Allianz RCM BRIC Stars Fund A share class by 8 March 2006.
Nick Smith, head of retail sales and marketing at Allianz Global Investors, said: "We are pleased to be on track to launch the first UK domiciled BRIC fund. The level of interest in the fund is very encouraging
"People understand the economies of Brazil, Russia, India and China stand apart from other emerging markets because of the combination of high and, we believe, sustainable growth rates, huge populations and the increasing economic interaction between these countries.
"This is very much an economic-led story, not a marketing fad."
Bric funds for Axa Investment Managers and GSAM
Axa fund will also invest in Korea
Both funds are Luxembourg domiciled
Two global vehicles
'Further plug advice gap'
Must appoint separate CEOs and boards
Advisers do come out well
Will report to Mark Till