Year's best global stock fund sees emerging markets rallying in 2016

Hotel Shilla

30/12/2015 16:06

By David Randall 
    NEW YORK, Dec 30 (Reuters) - The year's top-performing 
global equities fund as rated by Morningstar sees Asian and 
emerging market stocks as undervalued and primed to outperform 
in 2016. 
    Kristian Heugh, whose $641 million Morgan Stanley Global 
Opportunity  MSOPX.O  fund gained 20 percent for the year 
through Dec. 29, said his fund has been adding positions in 
South Korean companies such as Hotel Shilla Co Ltd  008770.KS  
and database company NAVER Corp  035420.KS  that have attractive 
valuations, while trimming some positions in technology 
companies that have rallied this year.  
    "With the U.S. and developed markets in general 
outperforming over recent years, it makes sense that some of the 
other markets might represent better value now," he said.  
    The move is a slight shift for Heugh, whose strong 
performance in 2015 was largely due to his position in U.S. 
companies. His three largest holdings this year - Facebook Inc 
 FB.O , software company EPAM Systems Inc  EPAM.N , and 
Amazon.com Inc  AMZN.O  - rose at least 37 percent over the year 
to date. His largest non-U.S.-based stock, Danish transport 
logistics company DSV A/S  DSV.CO , gained 45 percent for the 
year to date.  
    Overall, Heugh has approximately 48 percent of his portfolio 
in U.S. stocks, 40 percent in international stocks, and 10 
percent in cash. He is looking for companies with "strong 
barriers to entry" and high levels of cash, he said.  
    Heugh tends to own more companies in the technology and 
consumer discretionary sectors because they often have higher 
returns on invested capital and lower leverage, while shying 
away from higher-levered financials and materials companies, he 
said.  
    Over the last five years, Heugh's fund has gained an average 
13.8 percent a year, a performance that puts it among the top 1 
percent of the 773 global stock funds tracked by Morningstar.  
   
 
 (Reporting by David Randall; Editing by Dan Grebler) 
 ((David.Randall@thomsonreuters.com; 646-223-6607; Reuters 
Messaging: david.randall.thomsonreuters.com@reuters.net)) 
 
Keywords: GLOBAL FUNDS/BEST2015