Mutual funds: News

Author: Cathy Jones

Aberdeen Asset Managers is launching a smaller companies fund in March to tap into the under-researched small caps story in developing countries.

UK fund manager Aberdeen Asset Managers is to launch a new global emerging markets smaller companies fund, the firm announced yesterday. The fund will be a sub-fund of its Luxembourg-domiciled umbrella fund. The launch comes as a result of increasing interest in smaller companies in the developing world. It is still awaiting regulatory approval.

The fund will be managed by the emerging markets team at Aberdeen, led by Devan Kaloo, and will aim to provide long-term capital growth through investment in a portfolio of smaller company equities listed on emerging stock-markets around the world (defined by Aberdeen as companies with market caps below $2.5 billion). It will also invest in smaller companies in developed markets which have "significant activities" in emerging markets.

The fund will officially launch in March, the firm said. Aberdeen reckons its trademark research-based stock-picking style will enable it to extract "considerable long term value" from what is still a comparatively under-research asset class.

For Aberdeen, rising domestic consumption is a key emerging markets theme. Countries with a growing, youthful population and a burgeoning work force, could look forwards to enhanced earning and spending power on the part of their population. Thus in turn could drive domestic growth. Aberdeen thinks its new fund will add an additional small caps component to a portfolio that already has exposure to emerging markets via a large caps vehicle.

And what are the prospects for emerging markets, the darlings of 2005-06, going into 2007? "For this year we expect markets to rise again, but not as strongly as they did in 2006, because economic growth and corporate profit growth are likely to be somewhat slower," said Devan Kaloo, Head of Global Emerging Markets at Aberdeen. He thinks the long-term story in emerging markets is about rising domestic consumption, thanks to relatively young populations, and larger work forces.

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