Fund Objective

To aim to provide capital growth by investing in emerging market companies.

View on Past Performance

Global financial markets were shaken to their very core in September. The collapse of the Wall Street investment banking model drained the system of what little liquidity was left, leaving many commentators predicting not only the entrenchment of the current bear market, but the possibility of global recession. Emerging markets were not spared; the MSCI Emerging Markets index fell by 15.6% (total returns in sterling) over the month.In Russia, there was a dramatic response to the financial turmoil - the authorities shut the country's two bourses twice throughout the month. The RDX index ended the month 25.3% (price index, local terms) down as a series of events combined to take the heat out of what had become one the world's most bullish exchanges in recent years.As well as the collapse of several Wall Street institutions, Russian markets faced internal problems, such as the declining oil price, fears over the political fallout of the Georgian conflict and liquidity problems at banks. There were, however, sharp rallies as investors reacted to the prospect of the government injecting state funds into the market.Public money also played a role in supporting the Chinese market, which as of mid-September was down as much as 60% over 12 months. Stamp duty on share purchases was scrapped and sovereign wealth funds bought stakes in listed companies, including several of the country's largest banks. This revived the markets somewhat, and the Shanghai Composite ended the month down only 4.3%, significantly outperforming many other emerging market countries.

Future Expectations

However, investors are worried about the increasing risk of global recession and its impact on commodity prices. This could lead to large downgrades in earnings estimates for 2008 and 2009, dragging markets lower.

Fund Details