EM fund manager eyeing Nigeria after betting big on India

Robert Marshall-Lee ran one of the best-performing emerging-market funds this year by betting big on India and China. He’s holding off — for now — on places like Argentina, Nigeria and Vietnam.
Marshall-Lee’s $291 million Dreyfus Global Emerging Markets Fund returned 37 percent since January with stakes in companies such as Vakrangee Ltd., the Mumbai-based software developer that is the fund’s largest holding.
According to him Lagos beckons, but not anytime soon.
“We’ve been waiting to invest in Nigeria for the last four or five years, just being patient for the economy and the currency to shake out,” London-based Marshall-Lee, 45, said in an interview with Bloomberg. “We think the opportunity is there.”
Marshall-Lee’s fund is among the top 11 percent of emerging-market funds since the end of last year, data compiled by Bloomberg show.
On other frontier markets that stand out, Marshall-Lee says:
“It depends on the time horizon. Vietnam is developing in an attractive way. Argentina, there are some strong possibilities if they can get on top of their fiscal and inflationary situation.”
On oil and other risks: “The oil market disruption risk is huge over the next 10 to 15 years. We’ve got electric vehicles which are likely to grow very rapidly, particularly in China and Europe. That’s a big risk to the Middle East particularly. Even somewhere like Nigeria. Nigeria is a petro-economy. Russia is also a petro-economy. We have no oil companies in our fund. We have no Russian exposure in our fund, so there’s all sorts of things that a highly active benchmark-agnostic manager can avoid well ahead of time.”
Marshall-Lee’s investment strategy include: Investing in a five-year horizon, and a focus on return on capital, particularly when cash flows from the current operations are recycled into new capital investments.
“We look for companies that can recycle profits into future projects,” he said.
“On the other hand, you might have a really good family-run company in India, for example, which doesn’t fulfil any of those tickboxes. They might not produce a nice, glossy corporate governance report, but over the long term they’ve had great capital allocation positions and they always treat the minorities very fairly.”
The MSCI emerging-market stock index rose 0.9 percent at 8:20 a.m. in New York.