Thames River Capital has launched a global emerging markets long/short fund that aims to capitalise on the three key themes of emerging economies, their convergence with the West and cyclical investment.
A team of 10 will work on Thames River's Topaz fund ' four managers with stock picking responsibility plus six analysts.
Each member of the team will have responsibility for 20 to 25 stocks with positions taken mainly on a bottom up basis.
The fund will be concentrated, with around 10 to 25 positions and will take a long bias, although it can go 30% net short.
This long bias is because the company believes there is a strong long and short-term story in global emerging market equities, according to Edward Morse, director of sales.
Rory Landman is chief manager on the fund with Martin Taylor in charge of Europe, the Middle East and Africa. Howard Thomas is in charge of Asia, with support from KC Reddy and Katie Blacklock overseeing Latin America. Through the three themes they will seek to make returns of around 20% per annum, said Morse.
Convergence economies in- clude Central Europe, Mexico, Korea and Taiwan. These are places that have embraced or are moving towards a Western economic model. This creates strong opportunities because of increased direct foreign investment, good fiscal and monetary policy and relative stability, according to Thames River.
An added benefit over the last 10 years has been their strengthening currencies, said Morse. Emerging theme countries include China, India, Russia and Turkey, which Thames River regards as early stage convergence themes. They are some of the largest countries in the world and represent a significant driving force in terms of global growth.
'As they participate in globalisation their momentum is becoming in our view almost unstoppable,' said Morse.
Cyclical plays include Brazil, South Africa, Indonesia and Argentina, which, while difficult to justify as places for long-term investment because they are less stable, can be good areas for cyclical positions, according to Morse.
One common characteristic among them is a high exposure to demand for commodities, he said. Risk in the fund is countered by good stock picking and experience in using the balance sheet, according to Morse. The managers will invest no more than 10% of the fund in any single stock. The fund is available in euro and dollar share classes for a minimum investment of $100,000.
Putting the tech into protection
Square Mile’s series of informal interviews
Fallout from Haywood suspension
Launching later in 2019
£80bn funds under calculation