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October - 2002 - issue > Personal Finance
Analyst-Speak
Monday, July 7, 2008
WHO: ARJUN DIVECHA, based in Berkeley, California, is a member of GMO's board and is responsible for managing the GMO Emerging Markets Fund, the GMO Evolving Countries Fund and the GMO Asia Fund. Prior to his affiliation with GMO in 1993, he spent 12 years at BARRA directing software development, marketing, client service and emerging markets research and development. Divecha holds a B.Tech. in Aeronautical Engineering from the IIT, Mumbai and an M.B.A. in Finance from Cornell University.



STRATEGY: The disconnect between what we know and what the perception is where opportunity lies, says Divecha. “In 2000, things could not get any better for the U.S., yet people failed to read the writing on the wall. The macroeconomics was weak.” Divecha’s strategy is to study countries in crisis, where there is bound to be changes, typically for the better. “Crises force a government to make changes for long-term betterment, and this is usually evident in 2-3 years. We like these countries,” says Divecha. “We also look for momentum. Politics, elections, corruption and so on affecting the long-term economy is a myth. If a country’s momentum is good, it tends to do well.”



PORTFOLIO: “We are currently investing in Indonesia, Thailand and Russia. Despite the turmoils in these countries, there is strength in the economic fabric. Countries that have been doing badly tend to surprise us. China has been doing well so long that its well-being is suspect,” says Divecha.



ADVICE: “We are not in the regular investment markets. We typically source funds from small, but high-networth institutions and individuals. I would advise investors to be clear about their portfolio response, and adopt different models for different types of returns. Mutual funds are always a long-term investment. Patience will bear out in the end,” says Divecha.

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