Baring Asset Management ("Barings"), the international investment firm, is celebrating the first anniversary of the Baring Dynamic Emerging Markets Fund ("DEMF"). Launched on 29th June 2011, the Fund continues to demonstrate the benefits of employing a tactical multi-asset approach to investing in emerging markets. The objective of DEMF is to deliver emerging market equity-like returns with less than emerging market equity risk over a long-term investment horizon.
The Fund is run by Barings' successful multi-asset team and was launched to complement the flagship £5bn1 Dynamic Asset Allocation Fund (DAA). The flexible investment approach followed for DEMF has allowed it to react quickly to changing market conditions: since inception, the Fund has returned -7.07%2 and has volatility levels of 11.48%2 compared to the MSCI Emerging Markets Index which has returned -12.7%3 over the same time period with volatility of 21.4%3. Assets under management in DEMF have grown to £125m as at 29th June 20124.
Hartwig Kos, co-manager of DEMF, says: "Since we launched the Baring Dynamic Emerging Markets Fund, we have seen huge levels of global economic volatility. Much of this uncertainty has been catalysed by the on-going Eurozone crisis and the knock-on effect to global trade. Nevertheless, over the long term, we believe emerging economies should continue to grow faster than the developed world, reflected in higher productivity growth rates, rapid urbanisation and wealth creation. The multi-asset flexibility of DEMF allows us to target market opportunities across a wide range of developing economies and asset classes while also looking to protect against downside risks."
Andrew Benton, Head of UK and International Institutional Sales at Barings, comments: "We are seeing a lot of interest from institutional clients who recognise both the long-term growth opportunities offered by emerging markets and the track record that we have in using multi-asset solutions to provide equity-like returns with less risk. We felt the evolution of our flagship DAA product to an emerging markets specific solution was a natural step and we are delighted that our clients are recognising the benefits of our approach."
Since it was launched in June last year, the Fund has actively changed its asset allocation to accommodate market risks and opportunities. The chart at the end of this release shows the dynamic approach to allocating to Emerging Markets equities and bonds and the use of gold bullion, developed market bonds, cash and commodities.
Hartwig continues: "The Fund's flexibility has proved extremely efficient at managing risk and allocating capital more effectively when opportunities arise – invaluable given the year we have had so far. Our strategy allows us to pinpoint investments which we see as offering good value. The Fund currently has significant positions in Mexican and Polish bonds, complemented by strong allocations in US and Australian government bonds, while our largest equity markets position remains China, at 5.5%. Overall, just under 30% of DEMF is now in equities compared to 63% in bonds5."
At the end of May, in an indication of its strong belief in the multi-asset approach to investing, Barings launched the Baring Asia Dynamic Asset Allocation Fund. The Fund aims to achieve Asian equity-like returns with less than Asian equity volatility, over a long-term investment horizon.