Focus to cover all the emerging market bases

Focus Capital, a new London-based emerging markets boutique, has launched the first specialist emerging markets fund of funds, according to John Cleary, the company’s founder. The fund, designed for cross-border distribution, will invest across all asset classes, through equity, bond or hedge fund managers. “We will deliver superior risk-adjusted returns for our clients by making strategic asset allocation and specialist fund selection decisions to exploit the inefficiencies in emerging markets,” said Mr Cleary, a veteran investment strategist previously at Standard Asset Management, Invesco and FFTW. The rationale of this new approach is that “for emerging markets the best risk management tool is diversification.” Having a fund of funds approach, therefore, “will enable a shift in allocation to the more favourable strategy for a particular time in the cycle.” “For instance, after an emerging market crisis one, would want to allocate to distressed emerging market bond managers, while in the optimal part of the cycle you are looking for stock picker emerging market equity managers,” said Mr Cleary. The right strategy is “treating emerging markets as one homogenous whole” and not as “discrete and distinct subset of skills,” which is what happens in many investment houses, he said. “In our emerging market model portfolio over 80 per cent of the return comes from asset allocation between asset classes,” said Mr Cleary. The model currently allocates 20 per cent of its assets to China, 20 per to cent to India, 40 per cent to Latin America, and 40 per cent to EMEA.

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Cleary: treating markets as a whole