Christine Montgomery and Cathy Alsop from Edinburgh Partners Limited (EPL) were in Vancouver this week to meet with our clients and other interested investors.  Christine manages our Global Equity Fund.  With Canadian dollar returns from foreign funds being poor for the last...er...several years, and our fund well down since it was launched a year ago, the update was timely.

Christine covered a lot of ground, but I’m just going to highlight a few items that we haven’t fully covered in our quarterly reports.

• China and emerging markets - The fund currently has very light exposure to emerging markets including China.  EPL is interested in the growth potential of companies in these markets, but in recent quarters have not felt the valuations made sense.  With significant declines in the Asian markets, some stocks on their watch list are getting closer to a buy range.   They recently purchased LDK Solar, a leading Chinese manufacturer of solar wafers.
• EPL expects global economic growth to continue slowing.  In their bottom-up analysis, they still think earnings expectations are too high (outside the financial sector), so they fully expect more profit warnings.  Having said that, Christine was more optimistic about the opportunities they are now seeing than during any time in the last year.
• Defense to offence.  The fund is still positioned quite defensively (13% cash; heavy weighting in telecoms and health care stocks), as the time is not quite right to aggressively gear up the offense (emerging markets, beaten up financials).  The timing of such a shift may not be that far off, however.
• Japan is looking more intriguing.  The macro picture isn’t overly optimistic, but there are many companies that should benefit from importing high-end manufacturing equipment to Chinese companies.  Many of these businesses on the mainland are thirsty to move up the “value chain” and need Japanese technology to do so.
• Fawlty directions. The drive up the I-5 from Seattle (Christine and Cathy’s prior meeting) to Vancouver can be a lot more entertaining when you’ve got a GPS with John Cleese’s voice dictating directions (yes, there is such a thing). 

If you’re interested in hearing more of Christine’s thoughts on the investment climate and the positioning of the Global Equity Fund, we encourage you to listen to our latest podcast.