Adviser focus: Paul Bovey
Share
“There are still opportunities in emerging markets but people should have invested their money a year ago.”
Paul Bovey is the director at Nelson Dean Associates.
Q: According to BlackRock’s review of the Chinese ETF industry, not only are inflows into Chinese ETFs increasing but also the variety of passive vehicles available. Is this a surprise?
A: People are looking for ETFs because they are looking for cheaper options. I’m not surprised that they are now considering different investment strategies. Active funds are expensive. The trouble with China is that it is still a relatively unknown investment territory with a volatile stockmarket. For many, investing in an ETF is simply a way of playing it safe.
Q: Do you have any pure China funds on your radar?
A: I like active strategies such as the Jupiter China fund and the Gartmore China Opportunities fund. I like them because they have a strong track record and experienced, respected fund managers. I like the Gartmore China Opportunities because the fund manager knows the area and has been around for a long time. The manager of the Jupiter China fund too knows the area and the fund has done well since it opened. When selecting funds, I take into consideration a fund manager’s experience and his past performance. That is why I have not yet used any of the passive investment strategies. (article continues below)
Q: Have you looked at the fund investment trust prospectus for Anthony Bolton’s Fidelity China Special Situations fund? Are you a fan?
A: I have mixed feelings. It’s an expensive fund and Bolton might have little experience investing in China. Fidelity is bolstering too much on his name.There is also a risk that people will pour too much money into the trust and then take it out after a relatively short period of time.
Q: Are you worried about the emergence of an equity bubble?
A: The stockmarket is growing quite fast indeed. There are still opportunities in emerging markets but people should have invested their money a year ago. Emerging markets are still doing well, but by now everybody is chasing the same companies.
Q: Which type of investment is best structured to capture growth in China or other emerging markets?
A: I have been using active managed funds for many years, in particular those that have a strong track record. Among the emerging markets funds that I use is, for example, the Allianz Bric Stars fund. However, I am beginning to look into other types of investments, including ETFs.
Regardless of which type of investment we choose, investors have to be open-minded. Most of my clients are happy with funds investing in the UK or in Europe. I use the Thames River Global Boutiques fund because the fund manager has been around for a long time and knows when to move out of markets and when to tap new ones. The other fund I like is the William de Bröe International Growth Portfolio, a smaller fund that is not too volatile.
It is very hard to pick funds investing in Britain because of its various economic problems and the uncertainty that comes with the general election.
At the moment, investing in countries like China and India is out of most clients’ comfort zone. Despite staggering growth rates in emerging markets, they usually have a strong home bias.
