Look to emerging markets to capitalise on economic recovery
Martin Currie, the active equity specialist investment manager of Franklin Templeton, says “as the global economy returns to growth, investors looking to catch the growth wave should be looking to emerging markets.”
Alastair Reynolds, Portfolio Manager of the Legg Mason Martin Currie Emerging Markets Fund, agrees and says “Take one example. In 2021, the global semiconductor market will approach US$500 billion in sales and there are concerns about a shortage of supply globally.”
Global semiconductor businesses are dominated by emerging markets companies with Taiwan’s TSMC leading the race. The company’s revenue grew by 25% in 2020. South Korea’s Samsung Electronics and SK Hynix; and Taiwan’s Globalwafers were the next two main suppliers of semiconductors.
Reynolds says “another sector that highlights the strong prospects of companies in emerging markets is the electric vehicle (EV) market. The demand for EV batteries is expected to grow ten-fold over the next 10 years, and the majority of that growing demand is currently being met by Asian producers, including South Korea’s LG Chem and China’s CATL.”
The emerging market exposure gives investors access to young and growing populations and gives them the opportunity to invest in some really important consumption themes that are driven by urbanisation and digitisation. The Martin Currie Emerging Markets Fund provides access to “highly profitable companies that are capable of delivering higher levels of growth.”
Over the five years to the end of April, the Fund returned 17.0% a year (net of fees), compared with the benchmark return of 12.2% a year – top quartile performance for the Morningstar Equity Emerging Markets peer group. And over the 12 months to the end of April, the Fund returned 32.0% (net of fees), compared with the benchmark return of 26.0%.
The key holdings of the fundamental, bottom up focus fund are as follows: