This Fund is managed with a distinct growth bias, which aims to capture the growth premium associated with dynamic shifts in emerging markets.
13 November 2012
Why invest in this Fund?
1. Future opportunities.The Fund utilises Newton’s global investment themes to target future opportunities – focusing on areas with strong growth potential, not ‘old’ profit pools. The Fund presents a differentiated approach to its peers, which are typically skewed towards the ‘older value’ components of the emerging markets equity universe.
2. Emphasis on quality and governance. The Fund aims to capture long-term value creation in total return and seeks to invest in compounders – companies that generate real value from their growth and reinvest it for the benefit of all shareholders.
3. Committed, repeatable approach. Follows a highly committed, truly active and repeatable process, which aims to deliver strong cumulative returns that are driven by a high-conviction, benchmark-agnostic approach.
Lithium is a crucial component of the batteries that will charge the electric vehicle revolution. Chile owns the world’s largest and highest grade lithium deposit in Atacama Salar and is the world’s largest exporter not only of lithium but of copper too. With a government royalty take topping out at 40%, Chile’s lithium output has been described as a licence to print money – not a bad prospect for investors holding the right companies.
The BNY Mellon Global Emerging Markets investment team retains an active overweight allocation to Chile largely through its holding in Sociedad Química y Minera de Chile, the world’s largest lithium producer.
Emerging market consumers are getting wealthier and by some estimates will account for almost half of all global consumption by 2025. In common with the rest of the world the spending habits of EM consumers are migrating further from the high street and shopping mall and ever further online.
As of February 2019, the BNY Mellon Global Emerging Markets fund retains exposure to competitors Alibaba a company that dominates the worlds of Chinese e-commerce and social media.
Targeted healthcare solutions are proving a popular – and extensive – area in some emerging markets, causing managers of the Global Emerging Markets (GEM) strategy at Newton to reallocate assets there and away from conventional hospitals.
Over the life of the Newton GEM strategy (launched in May 2011), the team has consistently held between 5-7% in healthcare; the majority of the time this allocation has been via hospitals. Today the strategy has just under 7% in the sector but instead of healthcare infrastructure, the exposure is more towards therapy providers.
Newton’s emerging and Asian equity team says: “We have gradually evolved away from hospitals exposure because as a more extensive emerging market healthcare infrastructure takes shape, so too do regulatory and competitive pressures grow. We believe higher returns and higher barriers to entry can increasingly be found in more targeted healthcare solution providers that address the growing need to tackle ‘lifestyle diseases’ and the rising consumer demand for health insurance. Thus, exposure has been increased in both biologic drug producers and insurers.”
An increase in so-called lifestyle diseases (those associated with the way someone lives – such as heart disease, stroke, obesity and type 2 diabetes) has been rising for years in emerging markets. According to the World Health Organisation (WHO)’s report 10 years in public health 2007-2017 the number of adults worldwide living with diabetes has almost quadrupled since 1980. “Like population-wide obesity, its precursor, diabetes is increasing most markedly in the cities of low- and middle-income countries.”
The report goes on to note: “The Asia-Pacific region is generally considered the epicentre of the diabetes crisis. In these countries, people develop the disease earlier, get sicker, and die sooner than their counterparts in wealthier countries. Evidence is mounting that bodies programmed during gestation and early childhood to survive on low energy intake are metabolically challenged when confronted with even modest increases in calorie intake. Some researchers believe this may be one reason why people in India and China develop diabetes about a decade earlier than people of European origin and can do so following only a small weight gain.”
In some of Asia’s most populous countries, a generation that grew up in rural poverty, with too little to eat and jobs involving hard manual labour, now lives in urban high-rise apartments, with sedentary jobs and food environments loaded with cheap and convenient calories, the WHO states. “Partly as a result of these changes, millions of people lifted out of poverty to join the booming middle class now find themselves trapped in the misery of diabetes and all its costly complications.”
Tackling such changes in healthcare has thrown up a variety of investment opportunities and this shift in the GEM strategy has been positive for performance, according to Newton.
Investment Managers are appointed by BNY Mellon Investment Management EMEA Limited (BNYMIM EMEA) or affiliated fund operating companies to undertake portfolio management activities in relation to contracts for products and services entered into by clients with BNYMIM EMEA or the BNY Mellon funds.
1 Source: IMF, January 2018
Past performance is not a guide to future performance.
The value of investments can fall. Investors may not get back the amount invested.
Objective/Performance Risk: There is no guarantee that the Fund will achieve its objectives.
Currency Risk: This Fund invests in international markets which means it is exposed to changes in currency rates which could affect the value of the Fund.
Emerging Markets Risk: Emerging Markets have additional risks due to less-developed market practices.