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Enhance Your Risk-Adjusted Returns with Emerging Markets

Darren Gazdag

SVP of Business Development 
Excel Funds Management Inc.


Regular readers of Wealth Professional are no stranger to Excel Funds, one of Canada’s leading providers of emerging market funds. As low yields become the new normal in Western nations, investment in high-growth economies abroad looks increasingly attractive.

“The general acceptance of emerging markets has improved dramatically,” says Darren Gazdag, Excel Funds’ Senior Vice President of Business Development. “There are better growth prospects, better yield opportunities, valuations as a whole are more attractive, and earnings are more robust with EM.”

That goes not only for individual investors, but also the whales of the industry. “You can look at what the smart money is doing, whether that’s the large sovereign wealth funds, the largest endowments, pension plans – in some cases, they are allocating as much as 15% to EM,” Gazdag says.

The reasoning behind this shift is the same principle that guides investment decisions anywhere else – reducing risk while increasing reward. “They are ultimately looking for ways to enhance return and reduce volatility,” Gazdag explains. “In emerging markets, they can certainly do both. Whether they want growth opportunities or to augment or supplement income, certainly the lineup under the Excel umbrella can facilitate all of that.”

While Excel Funds has a global focus, it’s fair to say the nation it’s most associated with is India. The firm was founded in 1998 with the launch of the Excel India Fund, which has since become the largest and longest-running India-focused mutual fund in Canada.

“Most recently we launched two new Indian products – the India Balanced Fund, which is 60% equities, 40% fixed-income, Gazdag says. “The second offering is the New India Leaders Fund. It is focused on mid- to small-cap Indian companies. Those two have been live for three months now.”

The pace and scale of India’s recent growth has seen many observers calling it the new China. But while China itself is no longer expanding at a double-digit rate, Gazdag feels the world’s second-largest economy is far from a spent force.

“Most pundits speak about a slowdown in China, but it had growth of 6.5% in the last quarter on an $11 trillion economy,” he says. “That’s about $500 billion more in total global contribution than the last time it grew at double digits. I don’t think it will have a hard landing, and I think China is shaping up to be a good story going forward in 2017.”


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