Investment firm LOM’s new emerging-markets fund is off to a strong start.

The fund, which started in January, earlier this month hit a 6.5 per cent investment return.

The fund is designed to invest more in emerging market sectors leveraged to an increasing consumer class in the developing world.

Scott Lines, chief executive officer of LOM Group, said: “We are glad to add an important product to our staple of mutual funds which rounds out our product offering and gives our clients an opportunity to participate in one of the fastest growing parts of the global economy.

“Our timing so far has been good, even though we expect further volatility ahead.

“Although geopolitical risks remain elevated much of this risk may already be discounted in securities prices at these still historically low relative valuations.”

The fund is managed by LOM chief financial officer Bryan Dooley, the senior portfolio manager, and Jennifer Ma, chartered financial analyst.

Mr Dooley said: “We believe this product fits nicely into our line-up of leading edge investment products and will help diversify our client portfolios.

“The popular news seems to be giving us only negative headlines about currency issues and political risks in developing countries while ignoring a powerful underlying growth story.”

Mr Dooley said that the Morgan Stanley Capital International Emerging Markets Index had outperformed the Standard & Poor’s 500 by more than 3 per cent this year and that many emerging-market currencies had started to strengthen against the US dollar.

He added: “The key to us is valuations and these markets have underperformed for so long that even a modest tilt towards economic stabilisation can provide meaningful upside.

“Moreover, we believe our focus on the higher growth areas of the emerging-market sector will prove to be the right strategy in the years ahead.”

The fund uses an already proven process to identify key macroeconomic factors with has in the past contributed to superior relative performance.

The fund at present favours the consumer, healthcare and IT sectors, but is light on commodities, while generally avoiding state-owned enterprises, which LOM said “in many cases are run more for the benefit of local governments than shareholders.”