Bestinvest’s managing director of communications says that he wants to increase his holdings in emerging markets, and will likely be adding to his position in Aberdeen Emerging Markets. However, for a more high-risk, high-return play, he is considering Dr Mark Mobius’ £700m frontier markets vehicle, which invests in far-flung places with high growth potential.
"I think I will probably be topping up existing holdings before adding any new funds, although I may buy Templeton Frontier Markets," Hollands said.
"I think emerging markets generally are attractive at the moment and if you are a long-term investor, as I am, that’s where the growth will come from."
"I already have emerging market funds like Aberdeen Emerging Markets and I may be topping that up or buying into frontier markets."
"I think it’s more of a niche play so a small allocation there makes more sense."
Templeton Frontier Markets was launched in late 2008 and has returned 86.07 per cent to investors since then.
Its benchmark, the MSCI Frontier Markets index, has fallen 10.07 per cent in that time, according to data from FE Analytics.
Performance of fund vs benchmark since launch
Source: FE Analytics
Most of the fund’s gains came in 2009 and 2010, and the portfolio is slightly down from its peak in the latter year.
However, Hollands says it is a fund for the long-term, meaning that he can cope with the volatility.
Mobius’ highest country weightings on the fund are to Nigeria – where he holds large positions in banks – and to Kazakhstan – where he holds oil and gas exploration companies.
The fund is domiciled in Luxembourg, has a hefty total expense ratio of 2.58 per cent and requires a £5,000 minimum initial investment.
"After that, it depends on what happens in the next month," Hollands continued. "I probably won’t get around to doing this for another month as there are other priorities in my finances right now."
"Maybe Japan will have re-rated by then and it might be an interesting punt. In that case I might top up my holding in GLG Japan Core Alpha."
GLG Japan Core Alpha has beaten the IMA Japan sector and TSE TOPIX index over five and 10 years, making 105.19 per cent over the past decade while the index has risen 65.30 per cent.
Performance of fund vs sector and index over 10-yrs
Source: FE Analytics
Over three years the fund has not been so successful, however, losing 3.52 per cent while the benchmark is up 2.39 per cent.
Many commentators have suggested that Japanese markets should have a good year, after the election of a new government with more willingness to ease monetary policy.
Hollands says he wants to see how this develops before deciding whether or not to increase his position.
In general, Hollands is not expecting to make major changes to his portfolio this year.
"I have tried to stop adding to a bigger list of holdings but rather focus on those that are in markets that I find attractive from a valuation perspective. I think once you have more than 15 funds in a portfolio, it becomes unmanageable."
This means he foresees adding to his exposure to the five crown-rated £3.56bn Aberdeen Emerging Markets fund.
This fund has made 555.93 per cent over the past 10 years while the MSCI Emerging Markets benchmark is up 343.54 per cent.
Its success has caused Aberdeen to consider methods of slowing inflows into the fund, although there are no restrictions on existing investors adding to their positions.
Performance of fund vs sector and benchmark over 10yrs
Source: FE Analytics
Although Hollands recognises that small cap funds offer a similar high-risk, high-return proposition to emerging markets, he says that he is satisfied with his exposure to the sector.
"I think smaller companies are attractive too, but I already have lots of exposure to them in my portfolio," he finished.