manager jeff chowdhry has ditched restrictive tracking error target
F&C Asset Management hopes to turn around the fortunes of its struggling Emerging Markets Oeic by restructuring it as a 'best ideas' focus fund.
Jeff Chowdhry has assumed the lead manager role on the fund and ditched its former restrictive tracking error target and slashed the number of stock holdings.
Chowdhry, who said the fund "lost its way in recent years", was appointed head of emerging equities last year and will be joined on the emerging markets vehicle by Sam Mahtani, as alternate manager.
The revamped £9m fund is now being managed with 30-35 positions, with each holding entering the portfolio with an equal weighting.
Under the new structure, each regional specialist will pitch their best ideas to Chowdhry, who will select companies based on absolute stock potential and without reference to country weightings or tracking error objectives.
Chowdhry said: "The F&C name is synonymous with emerging market investment but in recent years we lost our way. A year ago the company signalled a determination to rebuild our emerging equities franchise and this is exactly what we have been busy doing."
During 2006, F&C strengthened its emerging equities team with a number of senior appointments including Gareth Morgan from Shell Pension Management Services, who now focuses on Russia; Latin America specialist Urban Larson from Barings; and Claire Franklin from Sloane Robinson, a London-based hedge fund manager, to cover Eastern Europe Middle East Africa (EMEA).
"The team has refined its stock grading process and only stocks with a one rating (high conviction) stand a chance of getting into the portfolio," said Chowdhry. "With a maximum number of 35 positions in the fund, for a new holding to enter the portfolio an existing one must leave.
"This structure will ensure that ideas must stay fresh and constantly fight to keep their place. Every stock has the potential to seriously contribute to performance irrespective of its market cap or country of domicile.
"As holdings drift to a 5% weighting in the portfolio, we will take profits and trim back or, if they fall to a 2% weighting, we will reassess and either top back up or sell the position entirely.
"Although the fund is now being managed without reference to a benchmark and with greater stock concentration, risk is nevertheless being managed through diversification of ideas. We want each holding to bring something different to the portfolio to ensure that performance is delivered by stock selection rather than grand themes."key points
Emerging Markets fund revamped as a best ideas fund
Holdings will be restricted to 35 positions
Only highly-rated stocks will be considered
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