Such opportunities to benefit from emerging markets growth by investing in developed market equities undermined the appeal of discrete, or ‘carve-out’, emerging markets mandates in institutional portfolios, Podger said. “A lot of investors talk about making separate allocations to emerging markets. I won’t say they shouldn’t do it, because valuations are okay and macroeconomic conditions are very solid, but going through a global portfolio gives you the flexibility to switch between developed and emerging market companies.” Threadneedle’s global equities fund pared back its emerging markets exposure to 6 per cent during the crisis, but began rebuilding allocations in the second quarter of 2009, initially through Indonesia, “because it never dropped; it never had a negative quarter of GDP”.

The manager first bought into the country’s banks, because of their low penetration into the consumer sector, but has broadened its exposure so that Indonesia accounted for 2.5 per cent of the portfolio, against the market’s 0.3 per cent weighting in the MSCI World. Martin Currie’s Watt admitted that some emerging markets currently appeared expensive next to some developed markets, and that the lack of structural buyers for the latter made the Chinese and Indian bourses subject to supply-constrained bubbles. “That’s why you really don’t want to be buying an emerging markets ETF [exchange-traded fund] at the moment,” Watt said.

He said Martin Currie’s China equity fund, managed by Chris Ruffle, which now accounted for 28 per cent of the firm’s total assets under management, was biased toward smaller ‘A-Share’ companies linked directly to the country’s burgeoning consumption growth. “You’re paying a lot more for the big state-owned enterprises because they are more liquid,” Watt said. Similarly, Martin Currie’s Asia ex-Japan fund sought out “boring”, well-managed companies with strong cashflows and “cast-iron business models”, which produced that Asian rarity – regular dividend payouts. “The thing about Asia is that every five years a crisis comes along and can destroy all your value. Our fund is designed to cope with that,” Watt said.