The materials sector and India as a whole are places where the opportunity for long-term growth potential is rife.
Speaking to Citywire Selector, Mehta, who currently has 10.8% of the small-cap portfolio allocated to India and 3.3% allocated to the materials sector, said plastic processor company Supreme Industries combines a sector and a country which he believes has huge potential.
‘We have 1.7% in Supreme Industries, I would not class it as a traditional materials business, it is the largest processor of plastics in India, so it’s not a commodity business.’
‘Both the company and the sector within India have a great growth outlook based on its market share, as you get much more consolidation within a very fragmented sector. We believe India will continue to grow at a rate significantly faster than most other emerging market and developed market countries.’
Mexico on the mind
Elsewhere in the portfolio, Mehta currently holds a 6.6% allocation to Mexico, a position he said would not be affected the by the outcome of the US election.
‘The US election won’t affect our allocation to the country, the election hype has provided us with opportunity, which is due to what has happened at a currency level rather than what is happening at an individual stock level.’
‘We have always had exposure to Mexico, as we find it a good corporate sector. Our allocation has nothing to do with the politics in the region and for us, it is about where we can find the best corporate holdings.’
The JPM Emerging Markets Small Cap fund returned 16% in USD terms over the three years to the end of October 2016. This compares with a 0.35% fall by its Citywire-assigned benchmark, the MSCI EM (Emerging Markets) Small TR USD, over the same time period.