Capital International offers new emerging markets fund

Capital International has announced the launch of the Emerging Markets Total Opportunities Fund, which it says offers growth opportunities while dampening volatility.

The fund may invest in a broad range of securities from more than 60 developing countries, including emerging and “frontier” markets stocks, local currency and U.S.-dollar-denominated government bonds, corporate bonds, inflation-linked bonds, convertible securities, currencies and cash.

While the portfolio will include stocks and bonds, it’s not a “balanced” fund, says portfolio manager Laurentius Harrer: “Rather than deciding that we need to invest 60% in bonds and 40% in stocks, we start by selecting individual securities based on their risk/return profile, relying on our own research in emerging markets. We consider the roles each one will play in the portfolio, its expected return and, most importantly, its downside potential.”

The fund is managed by Harrer, Luis Oliveira and Shaw Wagener. The portfolio was first introduced to U.S. institutional investors in 2007, before being rolled out to European investors in 2008.

“We came up with the idea for this portfolio after talking to investors who said that emerging markets equities were interesting, but that returns came at the price of sleepless nights and high volatility,” says Wagener. “We concluded that we needed great flexibility, as well as a process to manage that flexibility.”

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