Investment approach
The Barings Global Emerging Markets Fund has a large-cap bias and is style-agnostic, according to McDermott
“It is well-concentrated with fewer than 50 stocks and traditionally has a high weighting to the telecoms, media and technology, and financials sectors,” he said.
“The high conviction nature of the fund is supported by the fact that the top 10 stocks account for more than half of its total assets,” he pointed out.
Meanwhile, “the First State emerging markets equity team are traditionally long-term, bottom-up investors with a focus on capital light, cash flow generative businesses,” said McDermott.
Like the Barings product, the First State Global Emerging Markets Focus Fund is benchmark agnostic with an absolute return mindset and has a concentrated number of individual stock holdings (currently 45).
“But, there are some limits placed on investments, for example single country exposure is restricted to 30%, while exposure to a frontier country is capped at 10%,” said McDermott
Although none of First State’s funds are explicitly labelled “ESG”, they “all have a strong ESG target, predicated on the view that society will demand more from companies,” he said.
“The team at First State also pride themselves on trying to defend assets during volatile or at uncertain points in markets, but they struggled during the most recent sell-off because they did not own any of the big-tech names,” he added.
Fund characteristics
Country allocation:
| Barings | First State | |
| China | 39.4% | 27.5% |
| Taiwan | 13.0% | 3.8% |
| India | 11.4% | 26.8% |
| Korea | 11.0% | – |
| Russia | 4.7% | – |
| Brazil | 4.5% | 1.9% |
| South Africa | 3.3% | – |
| Hong Kong | 2.9% | – |
| Indonesia | – | 9.1% |
| Mexico | – | 9.1% |
| Argentina | – | 3.3% |
| Philippines | – | 2.0% |
Sector allocation:
| Barings | First State | |
| Financials | 26.2% | 27.8% |
| IT | 22.4% | 7.4% |
| Consumer discretionary | 14.2% | 20.1% |
| Communication services | 12.3% | 5.2% |
| Materials | 7.1% | 1.6% |
| Energy | 6.5% | – |
| Real estate | 4.2% | – |
| Consumer staples | 2.7% | 27.2% |
| Industrials | 2.3% | 6.5% |
Top 10 holdings:
| Barings | weighting | First State | weighting |
| Tencent | 9.9% | HDFC Bank | 5.7% |
| Alibaba | 8.9% | Mercado Libre | 4.2% |
| TSMC | 7.9% | Tencent | 4.1% |
| Samsung Electronics | 7.2% | Tsingatao Brewery | 4.0% |
| Reliance Industries | 4.0 | Yum China | 3.8% |
| CCB | 3.9% | PT Bank Central Asia | 3.3% |
| Ping An | 3.1% | ICICI Bank | 3.0% |
| LG Chem | 2.6% | China Resources Beer | 2.9% |
| Prosus | 2.6% | Kotak Mahindra Bank | 2.8% |
| HDFC | 2.5% | JD.com | 2.7% |
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