Legg Mason launches global emerging markets fund

The fund will be based on the long-established process behind Martin Currie’s Global Emerging Markets strategy. It will be run by Kim Catechis, Head of Global Emerging Markets at Legg Mason affiliate Martin Currie, and his team of experienced managers. The team manages the existing strategy which has over $1.9bn [2] under management, incorporating a range of pooled funds and large segregated mandates for clients across the globe.

The Legg Mason Martin Currie Global Emerging Markets Fund combines a high-conviction alpha approach with multiple layers of risk management that incorporates ESG analysis.

The fund’s objective is to deliver long-term capital growth by investing in sustainable companies from emerging market countries. The team will follow their current investment process, which is based on fundamental research and bottom-up stock-picking to generate long-term outperformance.

ESG analysis is firmly embedded within the process to help understand companies and make more informed decisions. It allows the team to highlight potential risks and opportunities, and identify areas on which to engage with management, ultimately leading to higher conviction. Martin Currie currently have A+ ratings in three categories from PRI, having been signatories since 2009. Demonstrating their commitment to company engagement, over the last year, the Emerging Markets team underwent 43 engagements and voted against the company’s management on at least one resolution 27 times in total.

The high-conviction portfolio aims to hold between 40-60 stocks, with a diversified country allocation and a high active share. The gross-performance of the Global Emerging Markets Representative Account over the last 12 months was 25.5% compared to the MSCI Emerging Markets index of 16.3% [3].

The most prominent theme in the portfolio currently is within technology, which is reflecting the importance of this sector in the emerging markets. One of the largest holdings is Chinese e-commerce player Alibaba, which has benefitted from dramatic online sales growth, greater penetration in rural China and the increase in the number of paying customers for its cloud business. “From a governance perspective, the company has demonstrated an increasing willingness to improve disclosure which, of course, we welcome”, says Catechis.

Commenting on the launch Kim Catechis, Head of Emerging Markets at Martin Currie, says: “Emerging market companies are already dominant in many industries, and are challenging for dominance in many more. Banking, capital equipment and energy are just some of the areas that will soon be led by the developing world. The challenge for investors is to translate the developing world’s competitive advantage into real, sustainable returns – we think our strategy can offer the solution”

Vincent Passa, Head of Legg Mason France, says: “Emerging Markets are very much on the agenda of our clients and we are pleased that we are in a position where we can let our clients benefit from the sound investment process of Martin Currie. Global Emerging Markets companies don’t necessarily behave like their developed-world counterparts and often face wildly different challenges and opportunities. To navigate this environment safely, investment managers need specialist skills, a thorough understanding of the individual companies and their risks, and perhaps most importantly, experience.”