Fund Objective

To achieve long-term capital growth.The Fund may also purchase fixed interest securities.

View on Past Performance

The third quarter saw one of the worst performances ever witnessed by emerging markets equities, as the global financial turmoil all but eradicated risk appetite. The relative winners were Turkey, Israel, Chile and India. Russia and Brazil both significantly underperformed, largely on account of heavy falls for the energy and materials sectors.The fund outperformed the index over the quarter. Stock selection and asset allocation in India was the greatest contributor to returns. Although an overweight in Brazil had a negative impact, stock selection was positive overall. From an asset allocation perspective, an underweight in Russia and overweight in Mexico also had a positive impact on performance. Stock selection in China was the greatest detractor.

Future Expectations

In the short term we expect volatility to remain high and markets to be guided by uncertainty due to global credit concerns.The recent turbulence has motivated indiscriminate selling; hence we see opportunities to position the portfolio in high conviction names trading at attractive multiples. We continue to focus on seeking to identify compelling value relative to the global peer group.History tells us to buy when confidence is low and foreign capital is exiting the asset class and sell when there is a crescendo of euphoria. EM equities are cheaper today than their average bear market trough valuations. However, earnings growth sustainability is a determinant factor in accessing future fair values. Over the long term, investors should focus on company fundamentals and the long-term secular growth story.

Fund Details