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Aberdeen's Kaloo says he was in ‘all the wrong countries' after mass outflows
by Eleanor Lawrie on Feb 06, 2014 at 07:32
(Update) Devan Kaloo, manager of the £2.7 billion Aberdeen Emerging Markets fund, admitted he has been in ‘all the wrong countries and all the wrong sectors’ in the past year as the fund, which is soft closed, suffered fourth quartile performance.
‘Bluntly, we have been in all the wrong countries and all the wrong sectors,’ he said.
Nonetheless the fund manager is positive on the emerging markets over the long term, which he says are experiencing a 'natural, healthy adjustment'. This has resulted in emerging market stocks trading at more attractive multiples than their developed market peers.
'Today we have got companies with long term prospects that are significantly cheaper than their counterparts,' he said.
'In the short term there are going to be concerns about tapering and the China slowdown, but we see the beginning of adjustments that make us confident for the long run,' he added.
The fund, which soft closed in April last year, has seen outflows of around £600 millon in the last 12 months, which combined with market movements, have seen the fund shrink by £1 billion.
As of December 2013, the fund was fourth quartile over one year, ranking 47th out of 52 funds in the IMA Global Emerging Markets sector, with a fall of 9.6% compared with a sector average fall of 4.1%, although it is top quartile over three and five years.
‘We are in a situation where our companies have sold off and the question is, do we change and mitigate macro concerns because the Chinese market has less risks than Brazil? The answer is no, we buy more of our companies because they have now gotten cheaper.’
The manager hopes investors will persevere with the fund in spite of its difficult year.
‘How long are investors willing to put up with underperformance? That is a question for our investors, but I would like to think they understand what we do and our comfortable with our performance for the long term and stick with us.’
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