As the ISA 2020/21 deadline looms Jason Hollands, managing director of Tilney Group, selects Aubrey Emerging Markets Opportunities as a growth fund to consider.
Rob Brewis co-fund manager said: “Longer term, the fund has significantly outperformed, which is down to the focus on the consumer and their aspirations, and in particular those areas of consumption demonstrating particularly rapid growth,” says Brewis. “Each country we invest in is at a different stage of income and so we often need to focus on different areas, those at the sweet spot of growth, and then find the best businesses to invest in.”
Brewis says 2020 was particularly helped by having over half of his portfolio in China which managed its way through Covid-19 with more success than most.
“To us, China remains the best consumer investment opportunity in the world. The rationale is based on the generational change happening, where the current crop of younger people are much more able and willing to consume, unlike their parents and grandparents who have spent the past 40 years saving.
“It is also, along with the US, the key driver of innovation in the world today. Much of this is done by China’s manufacturers as they move up in scale and technology, but much is also done in the service and consumer sectors such as e-commerce, social media and other online services. This latter area forms the core of our China portfolio.”
Brewis says India is the fund’s second largest exposure and had a torrid time early on in 2020 as the country was locked down in March, but he adds that the recovery has been stronger than almost anywhere as the virus was controlled relatively quickly.
“India is also the most exciting up-and-coming consumer market, a long way behind China, but finally starting to move and with several decades of growth ahead of it. We used the weakness in 2020 to build up our India portfolio and this is now coming through strongly for the portfolio,” he says.
Elsewhere Aubrey Global Emerging Markets’ managers are finding exciting opportunities in some of the same sectors (e-commerce, online services) in South East Asia and Brazil. Growth in these areas is just at that sweet spot right now, Brewis says.
“So overall we are optimistic for 2021,” he adds. “Global conditions are supportive: early stage recovery, low but rising interest rates and inflation. While the rally in Emerging Markets may broaden to include more traditional sectors in 2021, we do not expect a change of leadership, and that the emerging consumer remains the key place to focus your attention.”
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