What is it?
A global emerging and frontier markets strategy which, allows investors to take advantage of long-term drivers of sustainable, domestic growth across Asia, Latin America & Africa.
Why is it unique?
The fund managers are unconstrained, which means they have the ability to seek out the best long-term investment opportunities across their markets. In addition the fund managers use Environmental, Social and Governance ( ESG) criteria, to ensure that the companies they invest in are responsible, as well as having potential for attractive returns. As a consequence, the fund doesn’t own some household names like Samsung and Alibaba as their governance standard & commitment to the environment is poor.
Photo: Mike Sell (Co-portfolio manager, Future World Fund) Visiting Vmart, an Indian clothing retailer that is in the fund.
How has it performed?
Stock markets over the last couple of years have been driven by sentiment ( for example, tweets from Donald Trump) and emerging markets have been further affected by headwinds from US-China trade war and more recently the Coronavirus outbreak. As a consequence the focus on smaller, high growth companies has been out of favour. However, there has been recent resurgence in these companies, particularly in the countries the fund focuses on, where forward looking indicators are positive for 2020 and beyond. The fund also quickly reduced its exposure to China at the very early stages of the Coronavirus outbreak and now has funds to deploy as markets recover. Recent performance has been encouraging and we are confident that the fund will deliver and meet its long term objective.
If you are looking to invest in an ethical fund which has exposure to some of the most dynamic emerging markets.
If you are happy investing in medium sized companies in these markets which are perhaps not yet household names but could become the stars of the future.
If you understand that the fund is rated ‘high risk’ and should only represent a small part of your portfolio.
Over the past few years the fund has underperformed due to the factors mentioned. The fund manager believes that at some point in the future the performance will significantly improve as investors focus on the value of these companies as opposed to household names.
Photo: Roberto Lampl (Co-portfolio manager, Future World Fund) (Second from left) Visiting Ferreycorp, a Peruvian capital goods manufacturer in the Future World Fund.
Over the past decade Astra have recommended this fund to clients for the following reasons:
It gives exposure to a dynamic and actively managed emerging market fund.
Investing in this fund is ethical and part of its management fee is used to fund various development projects to improve the lives of people where the fund invests.
As issues like ‘climate change’, ethical working practices become more of a concern for investors and regulation supports this, these funds should outperform.
Over the past few years this fund has underperformed. Although we like the fund for the reasons mentioned above the bottom line is we want this fund to perform in line with expectations otherwise we will no longer recommend it.
Having spoken at length with the fund managers of the ‘Future World Fund’ Astra have decided to encourage clients to stay invested into the fund provided their risk profile has not changed. Investors in this fund also need to have a reasonably long term outlook as with the current volatility in the world due to politics and health concerns it maybe some time before performance significantly picks up.
If you would like to discuss this fund with Astra or have any concerns please drop us an email.