Global equity manager heads to Europe for EM exposure

‘The companies that we’re finding in Europe are those companies that are uniquely exposed to emerging markets whether they be consumer products or oil and energy groups such as Cairn Energy.’

‘If you put the European business on a reasonable 12/14 times earnings you get the emerging markets franchise for a mid teens multiple whereas to buy an emerging markets franchise in an emerging market you’re typically paying 25 times earnings.’

With globalisation continuing apace, the fund also looks to profit from one of its less desirable consequences - diabetes.

‘Novo Nordisk from Denmark has significant emerging markets exposure. It is overwhelmingly exposed to diabetes, which unfortunately is likely to become more prevalent as diets converge globally - as people work more, live in cities and exercise less. The company is well positioned in China in particular but also in other emerging markets that are likely to see greater incidence, unfortunately, of diabetes,’ he said.

On financials his outlook is mixed. He is bearish on banks but does see merit in what he calls 'agency business' within the sector.

‘As we look at a sustained period of low interest rates the profitability of [banks'] deposit franchise is fundamentally undermined. You’ve got no appetite for the loans, low profitability of the deposits and at the same time you’ve got increasing regulation around some of the other activities the banks are involved in. From all those standpoints we think that banks are unappealing and potentially high risk.’

‘Where we do find more appeal in the financial sector is outside banks. We’ve been long standing shareholders of Deutsche Börse, the German stock exchange and we’re invested in Willis Group which is a reinsurance broker.’

Norway is also a region that is presenting the fund with opportunity. Attracted by the country's oil wealth, stable property market and its top ten sovereign wealth fund, the team have invested in DNB Nor which is the largest retail bank in the country.

Over a three year period the Neuberger Berman Global Disciplined Growth Fund fell by 13.17% against a fall of 17.95% from the MSCI World index.