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UBS EM veteran builds up overweight in financials

UBS EM veteran builds up overweight in financials

Geoffrey Wong from UBS Asset Management has built up an overweight in financial names in his UBS Global Emerging Markets Opportunity fund.

More than 30% of the fund is invested in financial services. This is a 6% overweight in comparison to the benchmark, MSCI Emerging Markets Index. The majority of this allocation is banking names.

‘There is a lot of growth potential in emerging market banks, first and foremost in credit banking. This area is often underpenetrated. When the well-being of emerging markets is increasing, the clients of credit institutions are benefitting as well,’ said Wong in an interview with Citywire Deutschland.

Among the top 10 positions of the fund are Brazilian Banco Bradesco, Indian Hdfc Bank and Indonesian Bank Mandiri.

In April, Wong, along with five other fund managers, received his first Citywire AAA rating for his strong risk-adjusted performance over 36 months.

Old-fashioned banks

‘We are focused on banks from the private sector,’ Wong said. ‘These normally generate a big market share quickly and are in general more efficient.’ 

Moreover, he added, banks in emerging markets would benefit from rising interest rates worldwide and an improving economy.

‘The banks in which we invest are predominantly old-fashioned and generally have no or very little investment banking business. This makes banks more streamlined and transparent, and more predictable in terms of company profits and figures.’

The UBS Global Emerging Markets Opportunity fund has returned 38.2% over the past three years to the end of April 2017. Its benchmark, MSCI EM (Emerging Markets) TR USD, returned 20.55% over the same timeframe.

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