Citywire A-rated emerging markets star Andrew Foster has made a 'very rare' move and sold out of all his holdings in Turkey over concerns about the country's political environment.
The manager of the $2.7 billion Seafarer Overseas Growth and Income fund, has quit three holdings that he had in the country since the first quarter of the year, reducing his Turkey allocation to zero.
‘This is a very very rare thing that I would do, which is to leave a country for top-down, macro reasons. I very very rarely make blanket macro judgments but we quit three holdings in Turkey,’ he told Citywire.
In July last year a faction of the Turkish army attempted a coup against various state institutions, including the government and president Recep Tayyip Erdogan.
During the coup 240 people died, according to the Turkish government, and since then thousands of people have been arrested and removed from their jobs.
‘I’ve got some substantial concerns about the governance environment in Turkey at this juncture in history, related to the coup [and] the power president Erdogan exhibits over the society today,’ Foster said.
Foster admitted the timing of his exit was not ideal because two of the Turkish stocks he owned have done better since he sold them, but said he was resolved it was the right decision long-term.
In an interview with Citywire published in January Foster said he owned Arçelik, a household appliances manufacturer, and defense technology firm Aselsan, but that top-down concerns had led him to temper his investments in Turkey, despite attractive bottom-up numbers.
‘Had I been a pure bottom-up investor we would have overindulged in the lira, I would have bought five or six different companies,’ he said.
While Turkey is no longer part of his portfolio, Foster has been adding positions in China, utilities company China Yangtze Power, and Hungary, healthcare firm Richter Gedeon.
He said the latter had demonstrated a capacity to internationalize its operations beyond Hungary and Europe.
Foster set up Seafarer Capital Partners in 2011 and launched the fund in February 2012.
His Growth and Income fund has returned 16% over the past three years until the end of July and ranks 23rd out of 184 Emerging Markets funds tracked by Citywire.