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Baring Global Emerging Markets funds

The engine of global growth

Baring Asset Management Limited


155 Bishopsgate London EC2M 3XY Tel: +44 (0)20 7628 6000 Fax: +44 (0)20 7638 7928

JUNE 2011 FOR PROFESSIONAL ADVISERS ONLY

www.barings.com

Superior growth prospects

Emerging Markets equity investing at Baring Asset Management

We believe that the long-term investment case for emerging markets remains compelling. As we continue to see a slow and subdued economic recovery across western markets, economic growth in the developing world continues apace with the International Monetary Fund forecasting growth of 6.5% over the course of 2011. In contrast, growth across the developed world is expected to come in at 2.4% over the same timeframe. While the economic powerhouses of China and India continue to act as a key driver of emerging markets growth, it is important to recognise that strong economic fundamentals support the wider investment case for the asset class. Against a backdrop of high productivity, favourable demographics and growing domestic demand, we hold the view that asset returns in emerging economies should continue to outperform returns in the developed world over the medium and long-term. In this context, we expect the ongoing industrialisation and urbanisation of emerging markets to drive equity market performance over the coming months. While past performance is not a guide to future performance, it is notable that emerging market equities have performed strongly in recent times with the MSCI Emerging Markets Index largely shrugging off the impact of events in Japan and the Middle East, generating a total return of 7.7% in US dollar terms over the six months to the end of May 2011* Elsewhere, we would also highlight that emerging markets equities continue to look attractive from a valuation perspective. As at the beginning of May, the consensus 12 month forward price/earnings ratio for the MSCI Emerging Markets Index was around 10x and we view this as undemanding given historical valuations and the relatively low levels of bond yields on offer across the emerging world. In terms of our investment strategy, we will continue to look for well-managed companies with unrecognised growth potential, while always maintaining our valuation discipline. Looking ahead, we expect the macroeconomic backdrop to remain uncertain, largely driven by the ongoing sovereign debt crisis in Europe and the planned ending of quantitative easing in the US in June. While this will likely result in a period of heightened volatility across all equity markets, we believe that the fundamentals of the emerging markets asset class remain strong and we will continue to view any periods of market weakness as a buying opportunity. All in all, we expect emerging equity markets to continue to reward investors over the coming months, especially as growth across the developed world remains relatively subdued.

The engine of global growth

*Source: Thomson Reuters Datastream, 8h June 2011, in US dollar terms.

Introducing our funds


At Barings, we offer investors two ways to participate in our global emerging market equity strategy; via the Baring Global Emerging Markets Fund, an offshore fund, or the Baring Emerging Markets Fund, a UK authorised Open-Ended Investment Company. Both funds follow the same strategy and invest in a concentrated portfolio of 55-70 holdings. Both funds are managed by our experienced Global Emerging Market Equities Team. The head of the team is Roberto Lampl, who has 13 years of investment experience. Roberto is supported by his colleague Mark Julio, an investment manager with six years of investment experience. In running these funds, Roberto can call upon a team of 26 dedicated global emerging markets equity analysts. Part of the team is based in Hong Kong and cover emerging Asian markets. The remainder are based in London and are responsible for researching stocks in the EMEA region and Latin America.

How we invest
We follow a Growth at A Reasonable Price investment philosophy for all our equity funds. We have a disciplined and tightly followed investment process and while some of our competitors focus purely on stock selection, we aim to generate at least 50% of relative outperformance through country allocation. We use a common investment framework to structure our research into both countries and companies. Each emerging market country is scored, which gives a clear indication of the markets potential to outperform on a 12-month view. We look to identify countries with the most conducive conditions for positive newsflow and corporate earnings upgrades. We also believe that strong research at the company level is critical. As such, we seek attractively valued companies with strong business operations that look set to most benefit from the supportive wider economic environment. The portfolio is aggressively positioned and we take care to spend significant time actively controlling risk allocation, selecting a portfolio containing approximately 55-70 of the highest conviction ideas. We believe that this flexible approach, sensitive to prevailing market conditions, leads to superior long-term results for investors.

Baring Global Emerging Markets Fund fund characteristics


Baring Global Emerging Markets Fund Fund manager Fund type Fund size Number of holdings Launch date Benchmark index Standard charges Minimum investment Roberto Lampl Irish Authorised UCITS US$2.3bn 59 24th February 1992 MSCI Emerging Markets Index Initial: 5.00% Annual: 1.50% US$5000

A strong track record


We have a long and proud track record of delivering outstanding returns to investors in the worlds emerging markets. As the emerging world has changed, we have stood ready with the right investment solution. We were one of the earliest investors in China, early in Latin American, and were there when the Berlin Wall came down to bring Eastern Europe and Russia to our investors. The proof is in the numbers and, as at the end of March 2011, we were managing US$22.1bn in the wider emerging markets asset class. We believe that our flexible, research-driven approach effectively takes advantage of market inefficiencies and rewards investors. Both the Baring Global Emerging Markets Fund and the Baring Emerging Markets Fund have solid long-term track records in place, sustained in both rising and falling market conditions.

Source: Barings, as at 30th April 2011

Baring Emerging Markets Fund fund characteristics


Baring Global Emerging Markets Fund Fund manager Fund type Fund size Number of holdings Launch date Benchmark index Standard charges Minimum investment Roberto Lampl UK Authorised Open-Ended Investment Company UCITS 158.1m 70 20th November 1998 MSCI Emerging Markets Index Initial: 5.00% Annual: 1.50% Initial: 2000 Subsequent: 500

Source: Barings, as at 30th April 2011. The launch date relates to the GBP I Accumulation share type, all other information relates to the GBP A Accumulation share type.

Current investment themes


Looking ahead, we are encouraged that a number of emerging corporates seem to be gearing towards strong capex in 2011. Leading cyclical indicators are robust and given the high and rising return on equity of emerging markets companies, we expect capex to accelerate, with positive implications for markets such as Korea, as well as the Industrials and Technology sectors. As such, we maintain exposure to globally-focused cyclical stocks in Korea, reflecting our view that emerging markets contribution to global growth remains strong. We are also warming to Taiwan and particularly the Financials sector, an area of the market which is attractively valued and ripe for consolidation. In our view, the outlook for selected stocks in the Taiwanese Technology sector is also positive and we maintain holdings in firms well placed to take advantage of growing global demand for smartphones and highend ultra-slim notebooks. While we continue to see strong growth across the emerging world, we are also seeing rising inflationary pressures and markets have become increasingly fixated with the policy moves of various central banks. It is important to recognise that countries are at different stages of tightening and we would expect markets with less policy headwinds to outperform over the coming months. In this regard, a key change in the portfolio has been a shift away from countries which have further room for policy tightening, towards countries which are near the end of their tightening cycle and also have attractive valuations. On this basis, we remain positive on China. Notably, we do not see broad price pressures in the economy and we expect the continued appreciation of the Yuan to put downward pressure on the price of imported goods. Consensus expectations are for real GDP growth in China to slow to around 8-9% in 2011, and we expect a stabilisation of monetary policy during the first half of the year to lead to a rerating of Chinese equities from their current modest levels. A number of emerging markets are clear beneficiaries of the high commodity price environment and we have moved to position the portfolio accordingly. Russia is a prime example, a market which is undervalued and where high oil prices have not only helped the Energy sector, but also hastened a huge improvement in the budget deficit and wage levels. These factors should support strong economic growth over the coming months. More generally, our valuation discipline remains a critically important part of our investment process and we currently see attractive opportunities in Russia and Korea, with the latter showing a marked improvement in fundamental prospects. We also see cheap stocks in Hungary and Thailand but feel that this is offset by the level of country risk.

Country breakdown of Baring Global Emerging Markets Fund


Indonesia 3.8% China 24.5%

Mexico 5.2% India 6.8%

Taiwan 8.4%

Russia 10.1% Korea 16.0%

Others* 11.2%

Brazil 14.1%

Source: Barings, as at 30th April 2011. *Includes a cash weighting of 1.3%.

Sector breakdown of Baring Global Emerging Markets Fund

Consumer Staples 6.7% Consumer Disc 6.9% Industrials 8.7%

Others* 4.9% Financials 24.0%

Energy 14.0%

Information Technology 20.0%

Materials 14.7%

Source: Barings, as at 30th April 2011. *Includes a cash weighting of 1.3%.

Performance summary of the Baring Global Emerging Markets Fund


90 %

And finally, a word on risk


The Baring Global Emerging Markets Fund and the Baring Emerging Markets Fund are invested primarily in equities listed in the emerging equity markets of Latin America, Asia (excluding Japan), Eastern Europe and the Middle-East and Africa. As such, the funds are exposed to the volatility that can characterise equity share prices from time to time. These countries are emerging equity markets, and as a result, the funds can be exposed to economic, political and other risks associated with holding equities in developing markets. Returns from overseas equity markets can also be subject to fluctuations in exchange rates, which can have the effect of eroding or enhancing the value of the investment returns for investors. In addition, the approach we take to managing the funds and keeping the number of holdings at a reasonably focused size means that the funds may prove more volatile in performance than more broadly based funds. Please refer to the Prospectus for the full risk profile.

60

30

-30

-60 3 months 2010 2009 2008 Since inception*

Baring Global Emerging Markets Fund (US$) MSCI Emerging Markets Index Past performance is not a guide to future performance. Source: Morningstar, 30th April 2011. On a NAV per share basis with net income reinvested, in US$ terms. *Annualised since inception. Inception date: 24th February 1992.

Performance summary of the Baring Emerging Markets Fund


70 % 60 50 40 30 20 10 0 -10 -20 -30 -40 3 months 2010 2009 2008 Since inception*

Baring Emerging Markets Fund () MSCI Emerging Markets Index Past performance is not a guide to future performance. Source: Morningstar, 30th April 2011. On a NAV per share basis with net income reinvested, in Sterling terms. *Annualised since inception. Inception date: 20th November 1998.

FOR FURTHER INFORMATION PLEASE VISIT www.barings.com OR CONTACT:


France and Belgium: Benoit du Mesnil du Buisson +33 (0)1 53 93 60 00 Email: benoit.dumesnil@barings.com Jrme Spohn-Villeroy +33 (0)1 53 93 60 04 Email: jerome.spohn-villeroy@barings.com Germany, Luxembourg and the Netherlands: Howard Luder +49 (0)69 7169-1832 Email: howard.luder@barings.com Thomas Justen +49 (0)69 7169-1826 Email: thomas.justen@barings.com Marion Wolf +49 (0)69 7169-1814 Email: marion.wolf@barings.com Middle East: Nisarg Trivedi +971 4 401 9220 Email: nisarg.trivedi@barings.com South America, Italy and Spain: Nick Davidson (+44) 020 7214 1847 Email: nick.davidson@barings.com Switzerland and Scandinavia: Oliver Morath +49 (0)69 7169-1810 Email: oliver.morath@barings.com Thomas Justen +49 (0)69 7169-1826 Email: thomas.justen@barings.com UK, Ireland & Channel Islands: Rod Aldridge (+44) 020 7214 1005 Email: rod.aldridge@barings.com Carl Wilmore (+44) 020 7214 1227 Email: carl.wilmore@barings.com Matthew Finch (+44) 020 7214 1825 Email: matthew.finch@barings.com UK Sales Support 0845 082 2479* Email: uk.sales@barings.com *Telephone calls may be recorded and monitored

IMPORTANT INFORMATION
This document is approved and issued by Baring Asset Management Limited, authorised and regulated by the Financial Services Authority and in jurisdictions other than the UK it is provided by the appropriate Baring Asset Management company/affiliate whose name(s) and contact details are specified herein. This is not an offer to sell or an invitation to apply for any product or service of Baring Asset Management and is by way of information only. Before investing in any product, we recommend that recipients who are not professional investors contact their financial adviser. All relevant documents relating to the product, such as Report and Accounts and Prospectus should be read. The information in this document does not constitute investment, tax, legal or other advice or recommendation or, an offer to sell or an invitation to apply for any product or service of Baring Asset Management. Investment involves risk. The value of any investments and any income generated may go down as well as up and is not guaranteed. Past performance is not a guide to future performance. Where yields have been quoted they are not guaranteed. Changes in rates of exchange may have an adverse effect on the value, price or income of an investment. There are additional risks associated with investments (made directly or through investment vehicles which invest) in emerging or developing markets. Investments in higher yielding bonds issued by borrowers with lower credit ratings may result in a greater risk of default and have a negative impact on income and capital value. Income payments may constitute a return of capital in whole or in part. Income may be achieved by foregoing future capital growth. We reasonably believe that the information contained herein from 3rd party sources, as quoted, is accurate as at the date of publication. The information and any opinions expressed herein may change at any time. This document may include internal portfolio construction guidelines. As guidelines the fund is not required to and may not always be within these limits. These guidelines are subject to change without prior notice and are provided for information purposes only. This document may include forward looking statements which are based on our current opinions, expectations and projections. We undertake no obligation to update or revise any forward looking statements. Actual results could differ materially from those anticipated in the forward looking statements. Compensation arrangements under the Financial Services and Markets Act 2000 of the United Kingdom will not be available in respect of any offshore fund. Shares in the Fund are not available in any jurisdiction in which the offer or sale would be prohibited; in particular the Fund may not be sold directly or indirectly in the US or to a US person. Subscriptions will only be received and shares issued on the basis of the current Prospectus. Lists of locations, or location indicators on maps, are non-exhaustive. They may include locations where Barings has an office and/or where Barings has appointed a local organisation or individual to act on its behalf for certain aspects of its business. Version 06/SD

Baring Asset Management Limited 155 Bishopsgate, London EC2M 3XY Authorised and Regulated by the Financial Services Authority Complied (London): 8th June 2011

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