TORONTO, April 2, 2012 /CNW/ - Capital International is taking a new approach to emerging markets investing, introducing a portfolio that seeks to offer growth opportunities while dampening volatility. Capital International - Emerging Markets Total OpportunitiesSM is unlike any existing portfolio offered in Canada. It has the flexibility to invest in a broad range of securities from more than 60 developing countries.
As the "total opportunity" name implies, this portfolio can invest across the entire range of traded securities in emerging markets. That includes emerging and "frontier" markets stocks, local currency and U.S.-dollar-denominated government bonds, corporate bonds, inflation-linked bonds, convertible securities, currencies and cash. Portfolio volatility is measured daily, allowing the fund's managers to constantly calibrate their investment selections. An introductory video can be viewed at capitalinternational.ca.
"We seek long-term growth and capital preservation, but with lower volatility of returns than emerging markets equities," explains Shaw Wagener, one of the portfolio managers. "We came up with the idea for this portfolio after talking to investors who said that emerging markets equities were interesting, but that returns came at the price of sleepless nights and high volatility. We concluded that we needed great flexibility, as well as a process to manage that flexibility."
First introduced to U.S. institutional investors in 2007 and to European investors in 2008, this unique portfolio is now available to Canadian institutional and individual investors. It is offered by Capital International Asset Management (Canada), SM Inc., the only Canadian investment manager to receive straight "A" grades in every category of Morningstar Canada's 2011 stewardship report, which gauges how well fund companies align their interests with those of investors.
While the portfolio will include stocks and bonds, it's not a "balanced" fund. Portfolio manager Laurentius Harrer explains, "Rather than deciding that we need to invest 60% in bonds and 40% in stocks, we start by selecting individual securities based on their risk/return profile, relying on our own research in emerging markets. We consider the roles each one will play in the portfolio, its expected return and, most importantly, its downside potential."
Each of the portfolio's three managers — Luis Oliveira is from Brazil, Laurentius Harrer is from Germany, and Shaw Wagener is from the United States — have decades of experience in emerging markets investing. They rely on proprietary research from the Capital organization's emerging markets research network, which includes stock, bond and macroeconomic analysts based in Capital's offices worldwide.
The Capital organization has been active in emerging markets investing since the 1980s, when a subsidiary of the World Bank invited a Capital affiliate to manage the world's first emerging markets equity fund (not available to individual investors in Canada). In 1987, a Geneva-based Capital affiliate created the Morgan Stanley Capital International emerging markets index, published by MSCI Inc. Today, Capital Group International,SM Inc. and Capital Research and Management CompanySM manage emerging markets assets in excess of $20 billion and $55 billion, respectively.
This scale enables Capital International to offer anticipated MERs well below industry averages for emerging markets portfolios, according to data from Investor Economics as of December 31, 2011.
About Capital International Asset Management (Canada), Inc.
Capital International Asset Management (Canada), Inc. is part of The Capital Group Companies,SM Inc., a global investment management firm originated in Los Angeles, California in 1931. Capital International - Emerging Markets Total Opportunities is subadvised by Capital Guardian Trust Company,SM part of Capital Group International, Inc. The investment affiliates of The Capital Group Companies, Inc., which manage equity assets independently, are among the world's largest providers of global and international investment services.
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Capital International Asset Management (Canada), Inc.