Fund Focus - Lazard Developing Markets Equity Fund
Fund Focus - Lazard Developing Markets Equity Fund
Ten years ago conventional wisdom said the idea of investing in emerging markets was a risky one. Now the same wisdom says the idea of not investing in emerging markets is a risky one. It is close to an accepted fact amongst investment professionals and commentators that economic growth and therefore returns on assets will be stronger in emerging economies than their developed market counterparts over the next decade. While one should be careful of such confident consensus, the economic data comes down indisputably on the side of emerging markets.
As a mark of the status emerging market funds now hold, Lazard’s new fund in the sector has been named the Lazard Developing Markets Equity Fund. The Fund will invest in the securities of companies domiciled in countries that are included in the MSCI Emerging Markets Index, or have more than 50% of their net assets or sales from those countries. This approach provides some flexibility, as emerging market exposure can be gained without simply trawling through the stock exchanges of Singapore and Thailand.
When we think about emerging markets it’s important to remember that the debt and financial crisis that most Western economies are going through are actually problems that many Latin American and South East Asian countries are very familiar with, having been beset by similar issues for years. Now it is emerging countries that have little or no debt, functioning financial systems and appreciating currencies.
Lazard has asuccessful emerging markets equity team. The Lazard Emerging Markets Equity Fund, which has just recently soft closed returned 317.2% in the 10 years since 1 November 2000, compared to 252.7% for the MSCI Emerging Markets Index. This new fund will be run by the same team, with the same investment process, although with a slightly more ambitious performance objective (to beat the MSCI Emerging Markets Index by 3.5% per annum of the medium term).
Whereas many investment houses who invest in overseas equities put a great deal of stall in a global macro economic overview, Lazard are one of the few asset managers who operate a ‘bottom-up’ stock picking approach. The fund managers focus on the fundamental drivers behind a stock. Such an approach is particularly suited to emerging markets where issues surrounding corporate governance are still additionally pertinent and where inefficiencies in the market can allow for enhanced opportunities to identify under-researched stocks.
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The value of investments can go down as well as up meaning you may receive back less than you initially invested; they should not be regarded as short term solutions. Our research and commentary is not personal advice and should not be regarded as such, nor does it constitute a recommendation to deal. If you are unsure about the suitability of any investment then you should contact us for advice.