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It was the shock felt round the world. Ben Bernankes
suggestion earlier this year that the Federal Reserve Board
might begin to reduce its bond purchases roiled emerging
markets. Currencies and stock prices fell sharply from Brazil
to Indonesia as the prospect of tighter global liquidity
prompted panicky investors to withdraw massive amounts of funds
from those countries securities markets.
For Devan Kaloo the markets indiscriminate reaction to
a possible shift in U.S. monetary policy was a signal to buy,
not a reason to rush for the exits. Kaloo oversees more than
$60 billion in assets as head of global emerging-markets
Aberdeen Asset Management in London, and in recent months
he and his team have been adding to existing positions in
Brazil, India, Indonesia and Turkey, four of the countries
hardest hit by the recent turmoil. It was a gutsy contrarian
call considering the severity of the selling pressure, but the
manager puts more faith in Aberdeens bottom-up
stock-picking capabilities than in the sometimes
violent swings in sentiment toward emerging markets.
The most exciting times for us are periods of great
volatility, says Kaloo. It means good companies and
bad companies are getting dumped. Theres no distinction
being made about the quality of companies. And that should
ideally be an opportunity for us to capitalize on.
Kaloos sangfroid in the face of market turbulence is
emblematic of his firms fundamental approach to active
equity management. Its also the reason Aberdeen is the winner of Institutional
Investors first-ever European Investment Management
Award in the Emerging-Markets Equity category.
II screened hundreds of managers and picked the
leading ones based on short- and long-term performance and
Sharpe ratios, using data from fund information provider
eVestment. We then consulted with a select group of European
fund sponsors to identify the winners in 20 investment
alternatives and emerging markets.
For many of these companies, the secret of success is
sticking with tried-and-true formulas and resisting the
increasingly short-term focus of financial markets.
If you change your process, youre dead,
says Martin Gilbert, chief executive of Aberdeen, which is
based in its namesake Scottish city but runs most of its
£202 billion ($327 billion) in assets out of London.
We just have to weather the storm of fashion. We keep
fully invested and dont try to trade. Just buy good
companies and hold them.