Fund of the week: There's still life in the dragon
Aug 22, 2008
The Chinese dragon might be slowing down. But it's by no means tamed. That's the argument of Anthony Eaton, the shooting and tennis enthusiast who heads up the London-based CF JM Finn Global Opportunities Fund. Since 2005, he's been betting heavily that the developing world will continue to industrialise, and so far it's paid off. Over the past three years, his fund has returned 62% against 14% for the rest of the global growth sector.
The fund invests in commodity and infrastructure sectors, such as ports and toll roads, which should benefit from globalisation. The theory is that the West has already made itself rich and the rest of the world will now rise to meet its living standards. Eaton points to a recent PricewaterhouseCoopers report that China and India should be able to sustain average growth rates of 6.8% and 8.5% respectively until 2050. "On that basis, China's economy, at present less than a quarter of America's, will by 2050 be 30% bigger and nine times larger than ours," he tells The Daily Telegraph.
As the East grows, the West will end up paying more for 'inputs', such as energy, oil, commodities and food, he adds. That's not good news for most managers heading into the current slowdown. But that will make little difference to Eaton, who "is playing the 'new' industrial revolution – the last great move from agriculture into the cities", says Mark Dampier of Hargreaves Lansdown in The Sunday Times. Infrastructure projects are "defensive and stable", and in the current downturn, that's no bad thing.
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CF JM Finn Global Opportunities top ten holdings
Name of holding - % of assets
London Mining - 2.13%
Hallin Marine Subsea International - 1.58%
National Grid - 1.23%
Xstrata - 1.16%
Timah Tbk - 1.11%
Imperial Energy Corp - 1.04%
Koninklijke Vopak - 1.02%
Magindustries Corp - 1.00%
Srei Infrastructure Finance - 0.92%
Aggreko - 0.86%
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