Increasing inflation may be a risk for investors in India, but that market's sentiment-driven volatility can throw up cheap long-term investments for JPMorgan Emerging Markets Equity Fund, which is "overweight" on the world's largest democracy.
"In India, we can find businesses we want to own for a long time, (but) inflation there has hurt in the recent past," JPMorgan investment adviser Thomas Leventhorpe told Reuters.
India's main gauge of prices -- the wholesale price index -- rose 8.3% in February from a year earlier, well above the 7.8% forecast in a Reuters poll.
Despite worries about inflation and infrastructure, the fund's largest holding is in India's Housing Development Finance Corp, at 4.5%.
The fund, which is little more than a decade old, also owns more than 4 million shares in Bharti Airtel, the nation's largest telecoms service provider.
"We have held these for a very long time and we expect to hold them for a very long time in the future. They have a very competitive cost structure and a very large addressable market," Leventhorpe said.
With 21% of its money invested in China and Hong Kong -- the fund's favourite region -- Leventhorpe reckons "China has many opportunities, but also many risks.
"China has done a very good job of containing its economy recently. They are not trying to slow the economy ... they are trying to stop a property bubble."
China Merchants Bank Co Ltd and Ping An Insurance Group Co of China Ltd are among the fund's overall top-10 holdings.
Leventhorpe, who joined JPMorgan in 2007, believes a slower-than-expected recovery in US markets has added steam to investments in emerging markets. He said the fund was "overweight" China.
The MSCI Emerging Markets Funds index rose 16% in 2010 compared with a 13% rise in the Standard & Poor's 500 index.
The JPMorgan Emerging Markets Equity Fund, with more than USD 1.9 billion worth of assets under management, has risen 12%, including sales charges.
"If people are running scared on global investing then that will impact emerging markets," he said.
Underweightsky
The fund is, however, "underweight" Russia. "We don't like the Russian energy sector and that's a large part of the Russian market," Leventhorpe said.
Financials and consumer staples are other fund favorites, with close to half its money in these two sectors.
Leventhorpe said the immaturity of financial institutions in emerging markets, and tight financial regulations in the case of Brazil, were other investment positives.
As an aside, Leventhorpe, who lived in Japan for 3 years, said the earthquake and tsunami there will slow economic growth.
"But the rebuilding can increase economic activity," he said.
Leventhorpe, who travels and plays tennis when he is not strategizing, personally likes Indonesia and Turkey as investment destinations.
India's main gauge of prices -- the wholesale price index -- rose 8.3% in February from a year earlier, well above the 7.8% forecast in a Reuters poll.
Despite worries about inflation and infrastructure, the fund's largest holding is in India's Housing Development Finance Corp, at 4.5%.
The fund, which is little more than a decade old, also owns more than 4 million shares in Bharti Airtel, the nation's largest telecoms service provider.
"We have held these for a very long time and we expect to hold them for a very long time in the future. They have a very competitive cost structure and a very large addressable market," Leventhorpe said.
With 21% of its money invested in China and Hong Kong -- the fund's favourite region -- Leventhorpe reckons "China has many opportunities, but also many risks.
"China has done a very good job of containing its economy recently. They are not trying to slow the economy ... they are trying to stop a property bubble."
China Merchants Bank Co Ltd and Ping An Insurance Group Co of China Ltd are among the fund's overall top-10 holdings.
Leventhorpe, who joined JPMorgan in 2007, believes a slower-than-expected recovery in US markets has added steam to investments in emerging markets. He said the fund was "overweight" China.
The MSCI Emerging Markets Funds index rose 16% in 2010 compared with a 13% rise in the Standard & Poor's 500 index.
The JPMorgan Emerging Markets Equity Fund, with more than USD 1.9 billion worth of assets under management, has risen 12%, including sales charges.
"If people are running scared on global investing then that will impact emerging markets," he said.
Underweightsky
The fund is, however, "underweight" Russia. "We don't like the Russian energy sector and that's a large part of the Russian market," Leventhorpe said.
Financials and consumer staples are other fund favorites, with close to half its money in these two sectors.
Leventhorpe said the immaturity of financial institutions in emerging markets, and tight financial regulations in the case of Brazil, were other investment positives.
As an aside, Leventhorpe, who lived in Japan for 3 years, said the earthquake and tsunami there will slow economic growth.
"But the rebuilding can increase economic activity," he said.
Leventhorpe, who travels and plays tennis when he is not strategizing, personally likes Indonesia and Turkey as investment destinations.
No comments:
Post a Comment