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Chartwell launches Emerging Markets Alpha


Chartwell Partners, an Asia and emerging markets investment specialist, has launched Emerging Markets Alpha to help high-net-worth individuals and institutional investors capture the growth opportunities and manage the risks that go with emerging markets investing.

Chartwell president Carl Delfeld (pictured) says: "The goal in emerging markets investing should be to achieve superior absolute returns, not ride the roller coaster up and down."

Delfeld believes that investing in Asia and emerging markets should be put at the centre of a global portfolio to capture economic growth rates three times larger than America.

In addition, these countries may offer stronger currencies, more fiscal discipline and a rising global middle-class.

"The world is filling in right before our eyes. Sharp improvements in technology and communications coupled with economic market reforms are allowing emerging market countries to close the income gap with the West and this will continue for some time. Emerging markets now account for half of global economic growth and 33 per cent of world GDP," says Delfeld.

He points out that in 1990, mainland China’s GDP was roughly equal to that of Taiwan – now it is ten times bigger. Despite all the progress India has made to date, its per capita GDP is still only about USD1,000 with plenty of room to grow. Brazil now has a GDP approaching USD2trn and just this month was upgraded to investment-grade status. Turkey’s economy is now the 16th largest in the world – just behind South Korea. Indonesia, the third largest democracy in the world, is up 109 per cent so far in 2009.

Emerging Markets Alpha core service is the Emerging Markets Absolute Return portfolio that challenges the MSCI Emerging Markets Index by weighting country-specific exchange-traded funds in the portfolio looking forward, rather than conventional weighting based merely on the size of the market. For example, there are times when a relatively small market like Indonesia or Chile has a weighting larger than China in the portfolio.

Factors that go into choosing country allocations and weightings include data regarding relative valuations on a price to earnings, price to book and price to cash flow; political considerations and macro trends; how markets are trading relative to 50 and 200-day moving averages; and fund flows, as compiled by EPFR Global.

In addition, the portfolio offers investors exposure to emerging market fixed income, currencies, small caps and inverse ETFs that serve as a hedge by moving opposite emerging markets.

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