Pierre Willot (pictured), chairman of Paris-based asset manager Montaigne Capital, and his team do not hesitate to play single-country funds in the firm’s funds of funds and mandates.
Investments in these type of funds represent typically 10% to 15% of Montaigne Capital’s stock portfolios. In the latest issue of InvestmentEurope, Willot highlights that country-focused funds are an excellent way to get exposure to specific macro-environments.
He assesses currencies, commodities or even interest rate levels can create immediate strong headwinds or tailwinds to one country. Willot argues that political plays remain rare.
The firm is currently positioned on Russia, Italy, Malaysia and starts to build a position on the UK. Could a French fund selector avoid his own country and not select French equity funds in his allocation or buy-list? Willot replies that the French bashing, “often relayed by French citizens themselves”, must stop.
“Our country has wonderful companies, both in the large cap and small cap categories. We like owning these firms, and are able to find excellent asset managers on the subject. So we definitely have France on the list,” explains Willot to InvestmentEurope.
Regarding the most exotic country funds considered or invested, Montaigne Capital’s chairman says he and his team like the Avaron Emerging Europe fund, focused on emerging Eastern Europe countries such as Romania, Poland or the Czech Republic.
“The investment team is based in Tallinn, but the fund is Luxemburg-based. Even if this is not a pure “country-fund”, the excellent stock-picking work made on the region is worth the investment,” suggests Willot.
“Another very interesting country is Vietnam, where Comgest is doing a good job managing the Prevoir Renaissance Vietnam fund,” he adds.
If the reputation of countries could be harmed by the decisions of various bodies including OECD, the United Nations Security Council or the EU, this does not necessarily affect the fund selection of Montaigne Capital. On 5 December 2017, the EU established a black list of 17 countries considered as tax havens including South Korea but the country, alongside seven others, was finally removed on 23 January 2018.
Before South Korea was erased from the blacklist, Willot, invested in South Korean equities, said that Korean companies cannot be deemed responsible for the country not fulfilling – at that time – an appropriate level of cooperation in regards to fiscal issues but that the EU decision had not changed the firm’s investment policy on South Korea.
“We have a positive economic view on it, but are aware of persistent governance issues in the local corporate world,” Willot underlines.