Results analysis from Kepler Trust Intelligence

RNS Number : 1028A

Barings Emerging EMEA Opportunities

28 May 2021

 

Barings Emerging EMEA Opportunities (BEMO)

28/05/2021

Results analysis from Kepler Trust Intelligence

Barings Emerging EMEA Opportunities (BEMO) reported a 22.7% NAV total return for the six months ending 31 March 2021; the share price total return was 24%. Both compare favourably to the 16.49% return of the benchmark.

The trust was renamed during the period from Baring Emerging Europe. Most of the returns reflect the new strategy adopted on 16 November 2020, which broadened the investment universe to the EMEA region rather than emerging Europe. Much of the excess return during the period was due to stocks listed in the new geographies.

Kepler View

BEMO's change of mandate has created a more diversified proposition. The good results just reported were contributed to by companies in the old and new universe and in the long run we think this more diversified opportunity set may be able to generate more stable returns - the previous mandate had become dominated by the performance of the volatile Russian market.

This new portfolio demonstrates greater geographical diversity, which diversifies the risk and return exposures and reduces the specific political and country risks. It also shows sector and thematic diversity too. While there is a value tilt to the new universe and to the portfolio - with the high weights to energy, materials and financials - there are growing opportunities in growth sectors such as technology and ecommerce.

The benchmark and the portfolio have significant exposure to the energy sector (although less than the previous, emerging Europe universe). However, via positions in Anglo American and other mining companies BEMO also has exposure to the clean energy revolution, as a number of metals are vital to current clean energy technologies.

In our view BEMO now offers attractive diversification for both income and growth investors, from a more diversified portfolio with exposure to lots of under-owned areas - it is the only trust focused on the EMEA region.

Along with the change of strategy, the board negotiated a cut in the management fee from 0.8% of NAV to 0.75%, and initiated a new marketing drive including the publication of regular updates - investors can sign up at www.bemoplc.com .

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