Regional experience sets Aberdeen apart

Stuart James

A bottom-up approach to investment research, feet on the ground and extensive experience within emerging market countries has helped Aberdeen Asset Management take out the Money Management /IMCA Fund Manager of the Year Award 2007 for emerging markets.

The fund manager counts its experience within the emerging markets sector as a key reason for its success, having spent over 20 years concentrating on investment opportunities within Asia, Latin America and Europe.

Stuart James, Aberdeen’s associate director, business development, believes its exhaustive due diligence process, which focuses on specific companies as investment options rather than a bigger-picture view of countries or regions, is also a distinct advantage.

“This is very important because the flow of information [within emerging markets] is not up to the standard of developed countries,” James said.

For this reason, Aberdeen prefers a physical fund manager presence inside the countries where it invests client funds, with Latin America and some of the Eastern European countries the only regions invested in where it does not currently have offices. According to James, it is hoping to soon have a presence within Latin America.

He says having people on the ground is a big advantage, enabling the manager to focus on downside risk when conducting due diligence and take what James describes as a “forensic investment approach … to understand everything that can potentially bite us”.

This year’s finalists for the Emerging Markets category are Acadian Asset Management and Lazard AssetManagement.

Lazard attempts to analyse a company as its own management or a strategic buyer would by comparing a company’s valuation to the return it can generate on a sustainable basis on shareholders’ capital, Lazard senior managing director Rob Prugue said.

“We seek out high quality, financially productive companies whose valuations have been compressed due to near term concerns,” he said.

“We believe such value stocks are likely to outperform over a long-term investment horizon due to ‘reversion to the mean’, or the tendency for good performance to worsen and for poor performance to improve.”

Acadian was last year’s winner in this category and is a runner up this year.

“Our competitive advantage is stock selection. We use a quantitative approach coupling bottom-up stock forecasting with top-down country forecasting,” said Acadian managing director Rick Barry.

Speaking about the sector generally, he said: “Valuations have run quite a bit, but we do still see it as an attractive space. [We can] still extract strong advantages from market mis-valuations.”