Laurence Bensafi, deputy head of emerging markets equities at RBC Global Asset Management in London. Illustration by Joel KimmelThe Globe and Mail
While some investors are shying away from China amid concerns about the country’s economic growth, fund manager Laurence Bensafi is increasing her exposure to the country as part of her contrarian investment style.
“We try to look at areas that aren’t in favour at the moment and we think should come back in favour,” says Ms. Bensafi, deputy head of emerging markets equities at RBC Global Asset Management in London, who oversees about $4.9-billion in assets. “China is very attractively valued to us and we think [its economy] will rebound.”
At the same time, Ms. Bensafi is trimming some of her exposure to higher-valuation companies in countries such as South Korea and Taiwan, which together account for about 50 per cent of the benchmark MSCI Emerging Markets Index as of June 30.
“We’ve done very well in those areas over the past few years, but we’ve reallocated some money, especially into China, where we now have an overweight position [for] the first time in quite a few years,” she says.
Other emerging markets where she’s seeing opportunities include the Philippines, Indonesia, Vietnam, Latin America, South Africa and the Middle East.
“We see a lot of interesting companies that have been ignored because all the focus … especially in the past six months, has been on AI,” she says.
Ms. Bensafi’s RBC Emerging Markets Dividend Fund, Series F, returned 57.5 per cent over the past 12 months. That compares to 47.8 per cent for the benchmark MSCI Emerging Markets Index.
The RBC fund’s annualized return over the past three years is 28.9 per cent, versus a 25.5 per cent return for the MSCI benchmark. The five-year annualized return is 13.1 per cent compared with 10.8 per cent for the MSCI index. The fund performance is based on total returns, net of fees, as of June 30.
The Globe spoke with Ms. Bensafi recently about what she’s been buying and selling:
Name three stocks you’ve been buying and why:
Sany Heavy Equipment International Holdings Company Ltd., a subsidiary of China’s Sany Group, is a stock we bought in January on the Hong Kong Stock Exchange.
It’s a well-regarded manufacturer of heavy machinery for the energy and mining industries, but what’s new over the past few years is that it makes electric equipment for the mining industry. Not only do these machines help mining companies operate more cleanly, but they also cost less to operate and maintain.
This company is considered the best in the world at this and has significantly increased its exports to companies in Australia, India, the Middle East, Latin America and Europe, while also gaining market share from competitors, such as Caterpillar Inc. and Komatsu Ltd.
We added to our position when the stock dropped after the war broke out in the Middle East earlier this year. We believe it’s incredibly cheap at these levels and there will be a big rally.
AmorePacific Holdings Corp., the largest cosmetics and beauty company in Korea, is another stock we bought on the Korea Exchange in January. The company recently restructured several of its brands, many of which are becoming increasingly popular. It has more than 30 global brands, including Sulwhasoo, Innisfree and Cosrx.
We also like its holding corporation structure: 90 per cent of the business is AmorePacific, but it also has a few other smaller brands. It’s not a very well-known company, which is why we like it. We like buying names that few investors are looking at, and we’re excited because K-beauty is growing fast across Asia and other parts of the world.
Acter Group, a Taiwan-based company specializing in cleanrooms for semiconductors and data centres is a stock we bought on the Taipei Exchange in June this year. [It provides environmental controls for dust, temperature, humidity and airflow.] It also supplies some of the chemicals it uses, so it’s an integrated business.
What we like about Acter is it’s global. Not only does it operate in Taiwan but also across Asia, with a strong presence in China and in the U.S. It’s another lesser-known company with huge potential due to growth in semiconductor production.
Name a stock you’ve sold or trimmed recently.
Mr. Price Group Ltd., a South Africa-based fashion and lifestyle retailer, is a stock we sold in January. The company is seen as one of the best in its industry in South Africa. We bought it during a downturn in 2023 and it did well for us.
Last year, it made a big acquisition in Europe. [It acquired Germany-based NKD Group GmbH, its first foray into the European market]. We felt it was a bad acquisition for the company, as we believed it should focus on South Africa rather than invest in Europe, where many of its peers have tried and failed.
As it was a large acquisition that will impact the business for years to come, we were also concerned that it would overshadow its successful South African operation. We were ready to be convinced otherwise, but when we asked to talk to management several times, they refused.
Management also gave very little information to the market about the acquisition. For us, this lack of transparency with the shareholders is a big red flag, so we decided to divest our holdings.
This interview has been edited and condensed.