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BMO sets out to discover emerging market ‘small caps’

BMO sets out to discover emerging market ‘small caps’

by Terri-Ann Williams Aug 01, 2017 at 10:38


The recovery in emerging markets has prompted BMO Global Asset Management to launch a fund focused on smaller companies exposed to some of the world's fastest growing economies.

The BMO LGM Global Emerging Markets Smaller Companies fund will be managed by LGM Investments, BMO’s specialist emerging markets manager.

Citywire A-rated Irina Hunter, who currently manages several funds at the firm including the BMO LGM Global Emerging Markets Growth and Income fund, will run the new fund with Claire Franklin as co-portfolio manager.

BMO Global Asset Management was formerly known as F&C Investments but was renamed following its acquisition by the Bank of Montreal three years ago.

The fund will be based in Dublin but accessible from the UK, although it will be dollar-denominated which introduces an element of risk for investors in sterling.

It aims to deliver long-term capital growth by investing in smaller companies either based in or deriving a significant amounts of income and profit from emerging market countries. It will also invest some of its assets in 'frontier' markets that have get to gain 'emerging' status.

LGM’s chief investment officer and Citywire AA-rated manager Thomas Vester commented: ‘The emerging markets smaller companies sector offers long-term investors a fantastic opportunity to find quality businesses that are not yet appreciated by the wider market.’

Hunter added: ‘Emerging markets smaller companies are one of the few places left where one can achieve a genuine information advantage. Simply speaking, the sector lacks research coverage and, as such, price discovery. As stock pickers, this gets us very excited.’

The new fund will join the Citywire Global Emerging Markets Smaller Companies Equity sector which has 12 funds, which have returned 41% growth in the past three years.

Most existing global emerging market ‘small cap’ funds are also dollar-denominated and domiciled outside the UK. However, the Luxembourg-based Templeton Emerging Markets Smaller Companies managed by Chetan Sehgal offers a sterling share class for UK investors. It has returned 55.6% in the past three years to rank third in the sector.


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