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The FMG Rising 3 Fund had a very good quarter registering a 7.3% gain. The Fund is now up 13.0% for 2016.

China once again was the main laggard as equity prices continued trading in a very narrow range whilst the rest of the market rallied. A slight disappointment was the decision to once again not include China A in the MSCI index, although the expectations of a non-inclusion were priced in.

The major news for the broader Indian economy during the quarter was the passing of the long-heralded Goods and Savings Tax (GST). With 15 states already having ratified the bill in their respective assemblies, the path is clear for the next step of forming the GST Council to determine the rates.

Russia had a very good quarter with the RTSI Index up 7%. There was no major news on the economic front and the performance was purely due to Russia being a high beta play on what was a very good quarter in general in EM.

In terms of allocation, we have deployed all of our cash into the market. Back in July, we had a 40% allocation to Russia, but we did take some profit and brought our current exposure down to roughly 33%. We increased our exposure to India to around 38% as of end September and have a 25% positioning in China.

For the last quarter of 2016, we do not envisage a material negative turnaround in Emerging equity markets. We do caution that developed markets have stretched valuations and that could cause some volatility in the short-term, but we remain bullish on EM and expect equity markets to continue trending upwards as they have done this year. Finally, any US presidential outcome has been priced in, whereas the Fed rate hike path is still an unknown event, so we are keeping a close eye on this development.

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