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Selector: why I only back one French AM firm

Selector: why I only back one French AM firm

With so many asset managers offering similar funds, it can be hard to choose between them all.

In the latest edition of Selector Snapshot, one fund selector shares why he sticks to the asset managers he knows best.

Selector: Ionel Sbiera

Company: Invest AM

We don't screen funds a lot, so we have very few providers and very few asset managers. We have known them for a long time and we know what they do.

Each time we want to buy an asset class we don't spend time screening which is the best over a three-year or five-year period. We just go straight to the experts who are well known for what they do, that is the way we work.

The only French asset manager that I have is Varenne Capital, because they are very special in what they do. They manage global and European equities but they have a process which is quite different from the others.

For a fund that invests in only European funds this brings me diversification and something different, otherwise I will have a concentration of all the same ideas. They invest only in companies in which they believe there is a true economic value and they are contrarian in executing their views.

They will wait for a profit warning, so if the stock drops, they will add if they feel it is valuable. They keep the position long term and have a low turnover.

They use some macro hedges in their portfolio which is quite unique for a European equity manager. For example they use shorts on copper, biotech and subordinated debt.

Currently they have bought some protection on Topix and Eurostoxx 50. It is a very long term put, and I believe they are right. They are enjoying the very low volatility that is in the market today and this will work.

Turkish delight

Our biggest overweight is currently emerging markets, both in the equities and fixed income space. We have around 14% exposed to emerging markets which is around twice the benchmark of 7%.

We bought some Turkish equities at the beginning of the year because Turkey has been beaten down over lots of political issues.

At that time Turkish assets were hated by investors so we benefitted from this to gain some exposure. We use ETFs, because it is very hard to find Turkish equity funds.

Since March we bought into the frontier markets space, because we feel that these are the real emerging markets.

Frontier markets are very cheap. I believe it is quite a safe trade, it is cheap and nobody has it. If a wider sell-off occurs, I don't believe people will sell frontier markets.

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