Ignoring emerging market BRIC benchmarks has paid off for the T Rowe Price Global Equity Growth Fund, according to Kendal Law, Harbour Asset Management sales director.
Law, recently hired to promote the Harbour-backed portfolio investment entity (PIE) version of the T Rowe Price product to NZ institutional investors, said while the fund’s emerging market allocation is closing in on the maximum 25 per cent, it hasn’t loaded up on the full BRIC exposures.
“The portfolio has no Russian stocks and only one Brazilian company,” he said. “It’s concentrated on India, the Philippines and Indonesia.”
Law said while T Rowe Price remains “wary on China”, the fund does still hold investments there.
“But there’s no Chinese banks or any of the old state-owned enterprises,” he said. “The fund is focused more on companies exposed to China’s emerging middle class – like Alibaba.”
In the latest update on the fund, T Rowe Price describes emerging markets as “a very mixed bag”.
“… with disparity on the increase as a result of the sharp pullback in oil prices and varied political outcomes,” the fund report says. “In 2014, both stock-level and country-level returns were considerably more reflective of underlying fundamentals, and we expect this to continue in 2015.”
According to Law, the fund also remains underweight in the US while it has slowly ramped up its European exposure from about 10 per cent below benchmark to at market levels.
The Australian-domiciled version of the T Rowe Price fund – currently managing about A$1.1 billion – returned over 30 per cent in the 12 months to the end of April compared to the MSCI ex-Australia unhedged index of 27.39 per cent.
Law was on the road earlier this month with T Rowe Price senior institutional relationship manager for Australia and NZ, David Frazer.
He said meetings with local wholesale clients did indicate a healthy level of demand in New Zealand for opportunities to diversify offshore.
“[Frazer] said investors in New Zealand and Australia appear to be more proactive when it comes to global equities than US investors,” he said.