Bhim Asdhir discusses Benefits of Investing in Emerging Markets on The Lang & O'Leary Exchange
Uploaded by excelfundscom on 10.11.2010
Transcript:
>>
>>Amanda Lang: Welcome back. Well, during his three-day visit to India,
US President Barack Obama met with business leaders
and laid the groundwork for agreements
he says will support thousands of jobs and spur trade in high tech goods.
For investors looking to cash in on India’s growth economy,
our next guest firm has a big focus on India and other emerging economies.
Bhim Asdhir is President and CEO of Excel Funds Management.
Great to have you here.
>>Bhim Asdhir: Thank you.
>>Amanda Lang: Clearly, a lot of the focus in terms of
where the growth in the world is going to come is on emerging markets.
Give me a sense of your or how your funds play them;
directly through the companies in those markets right and then
you make it easier for the Canadians to buy into it directly.
>>Bhim Asdhir: Yeah . The real growth in emerging markets is driven by the middle class.
Twenty years ago, they were basically poor.
Today, if you go to visit any of these emerging markets,
the middle class is spending money.
There’s a lot of money in the middle class.
They are paying taxes; so infrastructure is getting improved.
But to get to the right companies in those countries,
you have to be on the ground.
The real companies that are catering to
the consumption of the middle class is not in the index.
And to get to those companies that are mid-caps and large caps
that are globally competitive,
you have to be on the ground.
And that’s what we have done.
We’ve got four top-notch managers on the ground.
We have managers Birla Sun Life in India.
And by the way, our Excel India Fund has been up and running for 12 years now.
A $10,000 investment in Excel India Fund today would be more than $55,000;
and that is despite the two major downturns that we’ve had.
>>Amanda Lang: What kind of fees do your funds carry?
You just launched three new funds.
And I want you to tell me about them in a minute
but what’s the basic MER on an Excel Fund?
>>Bhim Asdhir: Well you can buy an F class.
An F class, the MER is as low as 1.6%.
If you are buying an A class,
then the MERs are just under 3%.
But it pays to be in active management in emerging markets.
It really does pay.
>>Amanda Lang: Because you will, in the A class,
you will be making adjustments to the portfolio all the time?
Is that the diference there?
>>Bhim Asdhir: Well, no. No.
All of our funds, they are actively managed,
>>Amanda Lang: Yeah
>>Bhim Asdhir: So when I say active management,
we have to recognize the market cycles nowadays.
>>Amanda Lang: You mean not an ETF or index.
>>Bhim Asdhir: Passive management, ETF or buying ADRs
does not make sense in emerging markets.
>>Amanda Lang: Two of the funds you just launched,
short emerging market debt funds.
How complicated is it to put together a portfolio
that has the yield that people are looking for.
Has the growth but doesn’t have the risk
that can be inherent in some of these markets?
>>Bhim Asdhir: They’re very tricky.
You have to be a global portfolio manager
to invest in emerging market debt and that’s what we’ve done.
We’ve found our portfolio manager by the name of Amundi.
They’re headquartered in Paris and they manage $1 trillion.
Their last 10-year performance is in the top quartile.
As a matter of fact, their performance over the last 10 years
is 12.9% whereas the index was about 7.2%.
So they’ve done a great job.
Now investing in emerging market debt, there are three components.
There is the sovereign debt; there is the corporate debt; and the currency.
Now people forget about the currency factor
>>Amanda Lang: Yeah.
>>Bhim Asdhir: We believe that emerging market currency
over the next 10 years are going continue to appreciate about 1% to 1.5% a year.
So you’re getting an additional benefit
by investing in emerging market currency and that what has happened
>>Amanda Lang: But if you’re investing and then you repatriate your profit
back to Canadian dollars, you have to hedge out the currency
otherwise you’ll lose it on the translation back home.
>>Bhim Asdhir: Yeah.
>>Amanda Lang: If these emerging markets currencies
appreciate against our dollar,
we actually could lose some of the upside?
>>Bhim Asdhir: Of course, like for example over the last 12 months,
the Indian currency has appreciated 7% vis-a-vis US dollar.
And the Canadian currency has appreciated roughly 4% vis-a-vis US dollar.
So net net, you’re still ahead of the game.
>>Amanda Lang: All right. Good to have you here, Bhim.
>>Bhim Asdhir: My pleasure.
>>Amanda Lang: Bhim Ashdir, President, CEO of Excel Funds Management.
>>Amanda Lang: Welcome back. Well, during his three-day visit to India,
US President Barack Obama met with business leaders
and laid the groundwork for agreements
he says will support thousands of jobs and spur trade in high tech goods.
For investors looking to cash in on India’s growth economy,
our next guest firm has a big focus on India and other emerging economies.
Bhim Asdhir is President and CEO of Excel Funds Management.
Great to have you here.
>>Bhim Asdhir: Thank you.
>>Amanda Lang: Clearly, a lot of the focus in terms of
where the growth in the world is going to come is on emerging markets.
Give me a sense of your or how your funds play them;
directly through the companies in those markets right and then
you make it easier for the Canadians to buy into it directly.
>>Bhim Asdhir: Yeah . The real growth in emerging markets is driven by the middle class.
Twenty years ago, they were basically poor.
Today, if you go to visit any of these emerging markets,
the middle class is spending money.
There’s a lot of money in the middle class.
They are paying taxes; so infrastructure is getting improved.
But to get to the right companies in those countries,
you have to be on the ground.
The real companies that are catering to
the consumption of the middle class is not in the index.
And to get to those companies that are mid-caps and large caps
that are globally competitive,
you have to be on the ground.
And that’s what we have done.
We’ve got four top-notch managers on the ground.
We have managers Birla Sun Life in India.
And by the way, our Excel India Fund has been up and running for 12 years now.
A $10,000 investment in Excel India Fund today would be more than $55,000;
and that is despite the two major downturns that we’ve had.
>>Amanda Lang: What kind of fees do your funds carry?
You just launched three new funds.
And I want you to tell me about them in a minute
but what’s the basic MER on an Excel Fund?
>>Bhim Asdhir: Well you can buy an F class.
An F class, the MER is as low as 1.6%.
If you are buying an A class,
then the MERs are just under 3%.
But it pays to be in active management in emerging markets.
It really does pay.
>>Amanda Lang: Because you will, in the A class,
you will be making adjustments to the portfolio all the time?
Is that the diference there?
>>Bhim Asdhir: Well, no. No.
All of our funds, they are actively managed,
>>Amanda Lang: Yeah
>>Bhim Asdhir: So when I say active management,
we have to recognize the market cycles nowadays.
>>Amanda Lang: You mean not an ETF or index.
>>Bhim Asdhir: Passive management, ETF or buying ADRs
does not make sense in emerging markets.
>>Amanda Lang: Two of the funds you just launched,
short emerging market debt funds.
How complicated is it to put together a portfolio
that has the yield that people are looking for.
Has the growth but doesn’t have the risk
that can be inherent in some of these markets?
>>Bhim Asdhir: They’re very tricky.
You have to be a global portfolio manager
to invest in emerging market debt and that’s what we’ve done.
We’ve found our portfolio manager by the name of Amundi.
They’re headquartered in Paris and they manage $1 trillion.
Their last 10-year performance is in the top quartile.
As a matter of fact, their performance over the last 10 years
is 12.9% whereas the index was about 7.2%.
So they’ve done a great job.
Now investing in emerging market debt, there are three components.
There is the sovereign debt; there is the corporate debt; and the currency.
Now people forget about the currency factor
>>Amanda Lang: Yeah.
>>Bhim Asdhir: We believe that emerging market currency
over the next 10 years are going continue to appreciate about 1% to 1.5% a year.
So you’re getting an additional benefit
by investing in emerging market currency and that what has happened
>>Amanda Lang: But if you’re investing and then you repatriate your profit
back to Canadian dollars, you have to hedge out the currency
otherwise you’ll lose it on the translation back home.
>>Bhim Asdhir: Yeah.
>>Amanda Lang: If these emerging markets currencies
appreciate against our dollar,
we actually could lose some of the upside?
>>Bhim Asdhir: Of course, like for example over the last 12 months,
the Indian currency has appreciated 7% vis-a-vis US dollar.
And the Canadian currency has appreciated roughly 4% vis-a-vis US dollar.
So net net, you’re still ahead of the game.
>>Amanda Lang: All right. Good to have you here, Bhim.
>>Bhim Asdhir: My pleasure.
>>Amanda Lang: Bhim Ashdir, President, CEO of Excel Funds Management.