Pacific North of South - Financial Mail on Sunday

November 8, 2021

London-based North of South Capital is a boutique investment manager which specialises in global emerging markets.

It goes under the radar of most investors because it's lean and mean (just seven employees) and doesn't have the marketing clout of bigger rivals.

But it knows its emerging markets inside out and has an investment strategy that seems to work.

The business, 49 per cent owned by UK investment house Pacific Asset Management, has more than £2.4billon of assets under its wing. But its flagship is £455million fund Pacific North of South Emerging Markets All Cap Equity.

The fund embodies everything that the business stands for. It's well diversified – across both stocks and to a lesser extent markets.

Also, the companies it likes to invest in are typically under-valued by the market – but have the potential to be rerated in the future on the back of strong earnings growth.

The fund currently has 87 holdings even though its two biggest positions – in South Korean Samsung Electronics and Chinese internet giant Alibaba – account between them for more than ten per cent of assets.

Kamil Dimmich, investment manager and a partner of North of South Capital, says the company sometimes gets criticised for running such a broadly based fund. But he says they are not for changing. 'The diversified portfolio strategy works,' he adds.

'It's a great risk management tool. If a one per cent position goes awry, it means the fund is not derailed. It's not for everyone, but it helps us to sleep at night as managers.'

The performance numbers are solid. Over the past one and three years, the fund has generated overall returns of 24 per cent and 40 per cent respectively.

Although value investing – buying stocks that are undervalued in the hope of them being rerated – is currently out of favour as a result of the market's fixation with high-growth businesses, Dimmich says it delivers results for North of South Capital, so there is no reason to change.

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