HSBC funds of funds eye emerging markets

By Brian Gorman

LONDON (Reuters) - Emerging markets will provide the best return for equity investors in the long term, says the manager of two HSBC funds of funds, who is overweight in the category.

"We want to capture the benefit of the emerging consumer," Nick Pothier told Reuters.

"That will be the second wave for emerging markets. The first wave was really about manufacturing -- the second wave is likely to be about people in emerging markets starting to consume, aiming for the same material standard of living as those in the West."

Pothier manages the HSBC Open Global Return Fund, and the HSBC Open Global Distribution Fund, both launched in November 2006, sized at 119.9 million and 141 million pounds, respectively.

They have several common investments, though the latter puts more of an emphasis on being able to make distributions.

The Return Fund fell 8.1 percent in the year to May, while the Distribution Fund fell 11.3 percent. Both funds are benchmarked against the Investment Management Association Cautious Managed sector, which fell 13.2 percent, giving the funds rankings of 35th and 56th position, respectively, out of 127.

Pothier said emerging markets are about 15 percent of equity markets worldwide, depending on the definition of emerging markets used, but he was double that weighting.

He invests in First State Global Emerging Markets, JPMorgan's JPM Emerging Markets Alpha Plus and the Imara African Opportunities Fund to gain this exposure.