FMG (EU) Rising 3 Fund gained +5.7% in the 1st Quarter of 2017
The FMG Rising 3 Fund had another very strong quarter in Q1 2017, on the back of a strong rally in Emerging Markets. We feel that our view of the cheapness of Emerging Markets as compared to the US and Europe has been finally vindicated.
The major positive contributor in the first quarter of 2017 was India, where the main indices were up 17%. The latest guidance for this year’s growth number indicates GDP of 7.1%, which is extremely strong for the 7th largest economy in the world.
In Q1 2017 we increased our China allocation to 35%, our largest allocation in this Fund since August 2015. After a disappointing 2016, Chinese A share stocks have started their path to recovery with a reassuring 5% increase during the first three months. GDP growth has accelerated after many years of deceleration. Further, earnings growth has reversed from a five-year deceleration to quick acceleration during the first quarter.
We also cut our exposure to Russia to 31% as we took some profit following a stronger-than-expected 2016. We still continue to see Russia as very cheap compared to other Emerging Market peers, but are happy to stay on the fence momentarily to see where the next stage of the recovery takes us.