Macquarie offers BRICS to investors
The Macquarie Group has launched two funds giving investors the opportunity to invest in emerging markets, with a particular emphasis on Brazilian, Russian, Indian and Chinese (BRIC) equities.
The Macquarie-Globalis BRIC Advantage Fund comes in two forms, one that is managed in US currency and unhedged, and one that hedges all of the foreign currency transactions of the fund back into Australian dollars.
Specialist investment manager Globalis has been formed to manage both funds. The fund manager represents a joint venture between Macquarie and OneWorld Investments, with each party owning a 50 per cent share.
Globalis Investments chief executive David Dali gives several reasons for the focus on these four countries.
“Just the general size of the BRICs in population, the demographics of the BRICs, and the overall importance of what the BRICs produce make the BRICs the most important part of the asset class,” he explained.
The fund manager will employ a top down approach to selecting the equities for the funds, a method Dali thinks gives the product a competitive advantage.
“The approach focuses on country formulas first and all of the indicators within that country, and then we drive down to the sector levels,” he explained.
“It allows us to avoid emerging market related crises and enables us to mitigate some of the downside risks that are inherent in the emerging markets because we have more liquid investments and it makes it easier for us to generate cash in the portfolio very quickly,” Dali said.
The funds are long only and its operation stipulates 50 per cent of the cash invested by the product must be in BRIC countries. The remaining half of the monies can be invested in other emerging markets and, if need be, the offering can consist of 100 per cent cash.
Each funds’ objective is to outperform the MSCI Emerging Markets index in the long run and will be aimed at investors, such as self-managed superannuation fund members, who want to take advantage of the long-term growth of BRIC economies.
Macquarie has received seed capital of $35 million for the offerings from institutional investors. The funds are available to retail investors now and they can access both offerings via the major platforms in the market.
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