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2016 was a satisfactory year for the FMG Combo Fund, with the big positive contributors being Emerging Markets (in particular Russia), countered by a drag from our European and US exposure. Apart from the headline political stories that engulfed the world (Brexit, Trump, Syria), the main themes from a purely investment perspective were:

  1.  an oil rebound and a more generic, upward trend in commodity prices,
  2.  a rotation out of bond funds into equity funds, and
  3.  the return of EM as one of the strongest performing equity markets.

During the quarter the sentiment was mixed with the S&P 500 up 3.5% and EM down 4.5%, partially erasing some of the 2016 gains. We believe that 2017 will continue on the same basis and we will continue being aggressively invested in EM as it is one of the few spaces were we see substantial value. Bar any potential geo-political tensions, we think regions such as Russia, Latam and China are very good plays in the EM space. As such, we closed the year with an almost 60% allocation to EM, heavily skewed to these markets.

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