In this series of short profiles, we ask leading fund managers to defend their investment strategies, reveal their views on cryptocurrency, and tell us what they'd never buy.
This time our interviewee is Omar Negyal, manager of the Morningstar bronze-rated JPMorgan Global Emerging Markets Income Trust (JEMI).
Which Sector Provides The Biggest Investment Opportunity in 2022?
From a sectoral viewpoint, we find the most attractive opportunities within technology, consumer staples and financials. In particular, Indian IT services, Mexican retail, and stock exchanges across emerging markets present some compelling options right now.
What's The Biggest Economic Risk Today?
We are still cautious about near-term dividend announcements across emerging markets, mainly due to the halting nature of the recovery from the initial Covid-19 downturn. However, looking further ahead, we are confident about the earnings and dividend payment power of our portfolio companies. In our view, emerging markets continue to offer the potential for long term growth, and pay-out ratios for the asset class should generally remain relatively steady, at around 35%.
Describe Your Investment Strategy
We aim to build a high quality, high conviction portfolio that provides a more defensive and conservative exposure to the long-term secular emerging market growth story. We only invest in dividend-paying stocks. The company’s bottom-up, stock specific, fundamental approach taps into the ideas generated by our large emerging markets research team. We seek out strong companies that can provide long-term growth and a sustainable dividend stream for investors.
Which Famous Investor Do You Admire?
Former Magellan fund manager and philanthropist Peter Lynch. He said “invest in what you know”. It’s something I’ve tried to bear in mind when looking at emerging market stocks.
Name Your Favourite "Forever Stock"
Although it is difficult to say “forever” as we constantly assess a stock’s investment case, Taiwan Semiconductor Manufacturing Company (TSMC) is a true global success story. It’s the global leader in semiconductor foundry, providing manufacturing capacity for semiconductor chips designed by their customers. It generates big profits and cash flow and has an excellent dividend policy.
What Would You Never Invest In?
Stocks without dividends.
Growth or Value?
Value and quality. Value due to the discipline around dividend yield and quality because we look for companies that can produce sustainable dividends.
Pension or Property?
Both are important.
Cryptocurrency: Public enemy or Pioneering Proposal?
I’m happy to watch developments from the sidelines!
What Can Be Done To Increase Diversity In Fund Management?
Having a diverse team enables us to interact with a broader set of companies but also enriches our own analysis and collaboration, especially so in the context of emerging markets. Beyond our team, diversity, equity and inclusion remains an ongoing area of focus for our firm.
Tell Us About Engaging With A Company Where You Were Particularly Proud (Or Disappointed!) Of The Outcome?
I have met Samsung Electronics many times during the course of my career. Each time I’ve asked questions about their dividend policy. We were pleased the company listened to our views, alongside other minority shareholders, to develop a better dividend policy. There’s still room for improvement, but the trajectory is now a positive one.
What's The Best Bit Of Advice You’ve Ever Been Given?
The best strategy is the one you stick to. Now, one needs to have a sensible approach, but it’s just as important to be disciplined. I try to stick to my philosophy and process even in tough times.
What Would You Be If You Weren’t A Fund Manager?
I studied chemical engineering so probably something in that space!
