Fund managers “cannot be all things to all people”, according to Richard Garland, who heads up the Global Advisor and Global Financial Institutions groups at asset manager Ninety One.
Speaking at the IMPower Fund Forum event in Monaco, Garland told Financial Promoter how the business, which split out from banking parent Investec and rebranded as Ninety One in March 2020, has kept close to its South African roots through its sales and marketing, as well as its investment portfolios.
“We are focused on a small number of active strategies,” said US-based Garland, who leads global sales for the $160bn manager and has been with the company more than 17 years.
Ninety One’s strategies include specialist emerging markets and sustainable funds, and some combinations of both themes.
“Our content shares our views on EM and the breadth of opportunity,” said Garland. “In our marketing, like our strategies, we are focused on emerging markets – both equites and fixed income. We are also building out into private markets.”
Yet, over the past couple of years, neither investment theme has performed particularly well, which has led to outflows and investor disinterest.
For emerging markets, a supercharged US economy has dinted the performance of both equities and local currency debt. Political rhetoric around China has also convinced some investors to stay away, but the importance of the nation’s economy cannot be ignored, said Garland.
Ninety-One launched an emerging markets-ex-China fund, which draws on the “near-shoring” activity of the nation’s companies spreading internationally, said Garland, who is alert to the potential of the shifting sentiment.
There is plenty of institutional interest in emerging markets, even if advisory and retail clients remain hesitant, he said.
On the other hand, interest rate rises have made some sustainability-labelled projects either unprofitable or unaffordable, which, along with some political arguments, have added to pressure, but Garland believes there is no likelihood of Europe and the UK turning their backs on the approach.
For Ninety One, combining the two investment theses into a strategy also makes sense, and brings investment to key elements of the supply chain for the net zero transition.
“We have a live example of the sustainability challenge in our back yard,” said Garland, referencing issues around power outages in South Africa. “Divesting doesn’t solve the problem. You have to invest to make change happen. You can’t effect change from the outside.”
He also believes many emerging market economies are in a better position than developed counterparts, having made tough fiscal policy decisions already, and the opportunity for investors to make both returns and impact are ready and waiting for them.
“We will keep telling the story until the outlook changes,” said Garland.
The IMPower Fund Forum takes place in Monaco June 24-26.