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News Release from: Gartmore | Subject: Investments
Edited by the Insidemoneytalk Editorial
Team on 01 October 2007
Gartmore news in brief
Revitalised Interest in Emerging Markets as Growth Slows in the US
Expectations of slower growth in the US and further interest rate cuts in the pipeline in 2007 have stimulated investor interest in assets in emerging markets US consumer confidence has slipped to its lowest level for two years, but emerging markets are experiencing a period of strong growth, fuelled by rising investment and consumption
This article was originally published on Insidemoneytalk on 19 Apr 2007 at 8.00am (UK)
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The differential between the returns available in the US and elsewhere across the globe has led to the appreciation of currencies such as the Brazilian real.
According to Chris Palmer, Head of Global Emerging Markets at Gartmore, "Investors' preference will be for faster growing economies, and also for a lower allocation to the US dollar".
"Investors will get all of this by buying emerging markets." In contrast to the credit crises of the 1980s and early 1990s, many emerging economies are now underpinned by strong balance sheets and show primary budget surpluses (i.e before debt repayment charges).
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The perception of reduced risk, combined with a strong corporate earnings outlook, has resulted in net inflows into emerging market equity funds of $8.2bn in the last month, according to EPFR Global.
Gartmore's Emerging Markets Opportunities Fund returned 6.17% in the three months to 31 August, outperforming the sector average by more than three percentage points.
It returned in excess of 40% over the last twelve months, and ranks in the top decile relative to its peers.' Gartmore Sees Value among UK Financials Following the crisis at Northern Rock, Gartmore's UK Equities team is viewing the stock market with cautious optimism and has been capitalising upon periods of price weakness to add to its favoured stocks.
Alongside overweight holdings in sectors such as mining, electronic and electrical equipment and aerospace and defence, Gartmore has added to its positions in high quality banks and insurers.
"Gartmore has no exposure to Northern Rock and has not invested in the mortgage bank for some considerable time".
"However, the team considers that a certain amount of indiscriminate selling in the sector has created investment opportunity and left some fundamentally strong banks undervalued," said Sacha Sadan, manager of the ?341m Gartmore UK Growth Fund.
Sacha is encouraged that valuations are low and dividend yields high, viewing Lloyds TSB and Barclays as interesting and "possibly the next big stocks to turn the operational corner".
Both Gartmore's UK Focus and UK Growth funds are overweight financials as a whole.
However, this is due in large part to positions taken in the insurance rather than the banking sector.
Here, Prudential and Royal and Sun Alliance Insurance are among the favoured picks".
""Prudential shares have fallen, yet the company is unaffected fundamentally by the crisis in US sub-prime mortgages or the Northern Rock affair," says Sacha".
""Prudential's US business has significant growth potential, it has a world-class Asian business and is a beneficiary of favourable demographics, with private pensions growing and government provision in decline." Gartmore Extends Special Offer until End of Year For the Gartmore Cautious Managed Fund, the Gartmore Global Focus Fund and the Gartmore MultiManager range of Funds, for all lump sum investments now extended until 31st December 2007.
1% discount on the initial charge 4% initial commission New investments into the company's investment trust ISAit, PEPit and SAVEit schemes; No initial charge for new investments £1,000 lump sum and minimum transfer value ?50 minimum amount for monthly savings ' Source Lipper mid to mid - net income reinvested and net of fees.
As at 31 August 2007.
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