Tech Sector Can Power Emerging Market Portfolios (FE Trustnet)

FE Trustnet recently spoke with a couple of top performing emerging market active fund managers who believe the technology sector can power emerging market portfolios. It was noted that the technology sector has been one of the best performing areas within emerging markets as the MSCI Emerging Markets Information Technology index has nearly quadrupled the returns of the wider MSCI Emerging Markets index over the last five years.

Anh Lu, who manages the T. Rowe Price Asian ex Japan fund with a 28.5% stake in tech stocks, was quoted as saying:

“We are looking to take advantage of the continued growth in the online economy… Vipshop Holdings Ltd (NYSE:VIPS) is China’s leading online discount retailer, offering products at substantial discounts for limited periods of time. The company, which operates nationwide, already generates most of its transactions through mobile devices and still has a huge runway for growth. The focus is on user growth and out of 350m plus online shoppers in China, Vipshop still has just 24m active users today. Vipshop offers a compelling value proposition to brands and consumers and is a high-entry barrier business, with scale and operational expertise.”

Meanwhile, Gary Greenberg, who manages the Hermes Global Emerging Markets fund, splits his emerging market tech exposure into separate parts – starting with e-commerce and social networks companies like Alibaba Group Holding Ltd (NYSE:BABA) and Tencent Holdings Ltd (HKG: 0700; OTCMKTS: TCEHY; TCTZF). He also added:

“We also own several software services companies, Tech Mahindra Ltd (NSE: TECHM; BOM: 532755) and HCL Technologies Ltd (NSE: HCLTECH; BOM: 532281), in India which are focused on enabling companies to disrupt themselves before someone else does. The idea is to allow companies to not only get on the internet, but actually transform their business into a very thin structure – by automating just about everything they do.”

Finally, Jorry Nøddekær, manager of the Nordea Emerging Stars Equity fund with around 31% allocated to emerging market tech stocks, is targeting some niches more than others:

“We are also bullish on the semiconductor space – in companies such as Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM), eMemory, MediaTek Inc (TPE:2454). Then there is the automation area, in high manufacturing. Chroma Ate Inc (TPE:2360) is an amazing high tech company, working in many areas such as the Tesla Motors Inc (NASDAQ:TSLA) and Bayerische Motoren Werke AG (FRA:BMW) electric cars.”

To read the whole article, What to look for in your emerging markets fund, go to the website of FE Trustnet. In addition, check out our list of Technology ETFs.

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