Columbia Threadneedle has changed the manager and investment strategy of its Threadneedle Global Emerging Market Equities fund, Wealth Manager can reveal.
Dara White, the firm’s head of global emerging market equities, has assumed responsibility for managing the fund following its transfer to Columbia Management Investment Advisers in the US under a single investment process.
The fund’s previous manager, Ilan Furman, is stepping down after overseeing the transition, but continues to run the Threadneedle Latin America fund, while White will officially take over as manager in July.
Furman took charge of the fund in January 2018 following the departure of London-based manager Irina Miklavchich, who was head of the firm’s emerging markets desk for Europe, the Middle East and Africa.
White has been overseeing emerging markets on Columbia Threadneedle’s US side since 2008 and is also acting as lead manager on the Columbia Greater China fund for US investors.
The £267 million Global Emerging Market Equities fund’s performance has suffered relative to its peers since the end of 2016, in particular during last year’s emerging market sell-off.
It returned 26.7% in the three years to the end of March versus an average of 43.3% for the Global Emerging Markets sector, ranking 242/257 in the peer group.
White (pictured) said that the change in strategy was pursued slowly at first, but ‘as the volatility really peaked in that third and fourth quarter, we got very aggressive in terms of getting the portfolio where it really wanted to be'.
White said the fund’s new fundamental approach brought ‘significant changes in country weight, sector weight and in stocks'.
The focus is on investing in 70 to 85 small to large ‘stewards of capital’ with strong management teams, with return on invested capital given high priority in investment decisions.
With well-run emerging market companies viewed as behind in market share compared with state-owned enterprises and ‘mum and pop’ businesses, but holding huge potential, the team hopes to capture the upside as the economies they operate in develop further.
Examples mentioned by White include Tencent and Alibaba in China, Indian bank Housing Development Finance Corporation (HDFC) and Burger King of Brazil.
White acknowledged that longer-term tensions between the US and China are a concern, saying ‘I’m hoping the powers that be know better’ than to engage in a military confrontation.
He added: ‘The tone of pretty much all the questions I get around emerging markets these days is negative.'
But for an emerging market bull such as him, ‘the fact that everybody’s asking these questions is a good sign'.
With the sector relatively unfazed by Turkey's economic crisis and market reforms being carried out in countries such as India and Brazil, 'there's a lot to be excited about, for the first time in a long time, despite the daily headlines', White added.