Legg Mason and BetaShares have launched the fourth active ETF through their strategic partnership- an emerging markets equity fund.
The BetaShares Legg Mason Emerging Markets Fund provides investors with access to the superior growth potential offered by emerging market equities.
EMMG is managed by Legg Mason affiliate Martin Currie, a high conviction equity manager that has been managing an unlisted Australian managed fund version of the emerging markets strategy on which EMMG is based since September 2011.
Over the past five years, the unlisted fund has returned 18.6 per cent a year, compared with the benchmark return (MSCI Emerging Markets Index) of 14.2 per cent a year.
The fund has an annual management fee of 1 per cent. It currently holds 47 stocks, with 26 per cent of the portfolio allocation to China, 14.7 per cent to South Korea, 10.9 per cent to Taiwan and 10.5 per cent to India.
The biggest sector exposure is financial, at 26.7 per cent, followed by information technology (23.6 per cent), consumer discretionary (19.4 per cent) and communications services (8.2 per cent).
Legg Mason managing director, Australia and New Zealand, Andy Sowerby, says: “Emerging markets which now dominate world economic production also lead future global economic expansion.
“The International Monetary Fund predicts these economies will achieve average GDP growth of almost 5 per cent per annum over the medium term, a result that advanced economies will not match.
“This faster growth in emerging markets is underpinned by strong secular trends such as a fast- growing middle class, urbanisation, digitisation and social reform. Our new Active ETF has been designed to invest in those companies that are capitalising on these trends.
“These economies are also at the forefront of the global technology revolution, with many emerging market tech companies among the most innovative and fastest-growing in the world, driven by young, increasingly affluent and tech-savvy populations.”
Sowerby added that “the quality, structure, management and governance of emerging market companies varies enormously, and in our view, this asset class is ideally suited to an active management approach. EMMG is managed by the specialist team at Martin Currie and they build a concentrated portfolio targeting only those businesses that meet their exacting investment criteria.”
Alex Vynokur, chief executive of BetaShares, says: “Australian investors are continuing to seek new opportunities to diversify the equities allocation of their portfolios beyond the highly concentrated domestic sharemarket.
“While developed global equities have been the dominant asset class in recent times for such a purpose, we believe that investors are increasingly eager to look beyond these markets to the fast-growing and exciting emerging markets.
“With the launch of EMMG, we are providing access to emerging markets in a simple to access manner, and via a fund that is managed by an experienced and proven investment team.”