Gartmore Emerging Markets Opportunities Fund upgraded

The rating agency OBSR has upgraded Gartmore’s Emerging Markets Opportunities Fund from ‘A’ to ‘AA’.

According to the agency, the Fund is being managed by Chris Palmer using a “solid and clearly articulated investment philosophy and investment process”. Chris has led Gartmore’s Global Emerging Markets desk since June 2006. During that time, the assets under his management have increased from $3.2bn to $7bn in value.

Chris’s approach is based around identifying stocks which have the potential for unexpected earnings growth. According to Chris, companies which already have strong franchises are likely to be able to replicate performance, mainly because operational challenges in emerging markets make it harder to duplicate.

OBSR notes that Gartmore’s Emerging Markets Opportunities Fund can be managed quite aggressively, but recognises that this is counterbalanced by “a sophisticated portfolio construction and risk management process”. The process includes assessing the risk impact and liquidity implications of individual positions using dedicated software. The Fund typically contains a relatively small number of holdings, between seventy and ninety in number, and is characterised by low turnover. “Your hit ratio can never be 100%,” Chris says. “You must be prepared to walk away from a bad idea and learn from it. But we also want to take calculated risks. There should be 10 to 15 stocks which are riskier. If you don’t, you’re probably not pushing hard enough.”

The US Shopper is Alive and Well, says Gartmore Subadviser Marsico

Shopping figures for the start of the traditional Christmas shopping season point to the overall health of the US economy, says Marsico Capital Management’s Cory Chilchrist, manager of the Gartmore US Opportunities Fund and the Gartmore SICAV US Opportunities Fund.Amid fears of a US slide into recession, this year’s numbers for the holiday weekend were eagerly anticipated by market watchers.

ShopperTrak RCT's National Retail Sales Estimate (NRSE) reported that retail sales for ‘Black Friday’ and ‘Black Saturday’ combined rose a steady 7.2% when compared to 2006, with each day posting total sales of $10.3 and $6.1bn, respectively. ShopperTrak checks sales at more than 50,000 US retail outlets.

According to Cory, the ShopperTrak NRSE retail figures were as Marsico had expected, dispelling fears that the US economy is already in recession or lurching towards one. “There is a general trend on the part of shoppers to shun the middle tier of retailers and flock to the bargain chains. Given the current economic blues, shoppers are acting rationally with their preferences,” he continued. Cory also commented that, although the average spend was down, traffic was up, as shoppers hunted for the big discounts offered by retailers.

In Marsico’s opinion, the US retail sector currently resembles an hourglass, as both the high and low ends are performing well, with the middle squeezed. Marsico has adopted this ‘hourglass’ approach to its retail holdings in both Funds, noted Cory.

At the low end, the Fund has an overweight in Costco Wholesale, relative to its benchmark, the largest US wholesale club operator, and at the high end, a non-benchmark holding in Saks. Costco has increased its membership fees, while Saks has benefited from a targeted inventory reinvestment strategy that is leading to increased sales productivity. These holdings are mirrored in the SICAV version of the Fund. Marsico plans to keep a watching eye on the retail sector for suitable entry points into other stocks.

Many employers grant the day after the Thanksgiving public holiday- ‘Black Friday’ - as a vacation day, increasing the number of potential shoppers. Often cited (sometimes inaccurately) as the busiest retail shopping day of the year, the common use of the term ‘Black Friday’ refers to the first day of a given calendar year upon which retailers’ year-to-date profits and loss statements turn profitable, or out of the ‘red’ ink and into the ‘black’ ink. Thanksgiving fell early in the calendar this year, extending the Christmas shopping season.