The risk of conflict in the Crimea may have sent investors diving for cover, but Mirabaud Asset Management’s Daniel Tubbs views the turmoil as a buying opportunity.
Russia’s stock market has plunged by nearly 20% over the last month as tensions have risen, but the country is now the largest overweight in Tubbs’ Mirabaud Equities Global Emerging Market fund.
He is playing down the politics around the situation in Ukraine, saying he is ‘relaxed’ about the outlook and comfortable with his 4.72% fund weighting to Russian stocks.
‘You might be horrified to see our largest overweight is Russia considering what is happening with Ukraine, but we’re only in Russia for the stocks that we like. We certainly don’t hold the likes of Gazprom,’ he said.
His holdings include Yandex, the ‘Russian Google’, which he said is an attractive play on the growth of online advertising. He is also backing Magnit, which is a ‘very good retailer’ that is growing rapidly.
Tubbs also has exposure to Sberbank, which he deems ‘one of the cheapest banks in the world’. It is trading at 4x earnings ‘and has only 1% of its assets in Ukraine’.
Elsewhere, he is overweight Saudi Arabia and Qatar, highlighting key holdings, Qatar Nation Bank and Saudi petrochemical firm Sabic, which both pay a 5% dividend yield.
Saudi’s Etihad Etisalat is his only telecoms holding and he describes it as ‘one of the few in emerging and frontier markets that is still delivering earnings growth’.
His largest active stock position is in casino resort Sands China, which operates mainly in Macau.
Its share price has risen 77.8% over the last 12 months. In the region, he also holds China State Construction International, a mid cap civil engineering and construction firm operating in Hong Kong, Macau and mainland China.
He has held the stock since the fund was launched in 2012 as a play on affordable housing.
‘Emerging markets have the potential to be the best performing asset class in 2014. It is a bold statement, but the emerging market investment case in intact,’ he said.
Over the last 12 months, the fund has posted 8.6% losses compared to a 10.49% fall in the MSCI Emerging Market index. Since inception in July 2012, the fund is up 2.11%, against the benchmark’s 1.48% rise.