* Has cut back on pure-play emerging market stocks
* Those now total 8 pct of AuM, from 20 pct 2 years ago
* Europe consumer staples a good bet on emerging markets
* SAB Miller, Carlsberg, Diageo all well placed
* Current big stakes in Nestle, Richemont, Toyota
By Simon Jessop
LONDON, Nov 16 (Reuters) - Consumer goods stocks with an indirect exposure to emerging markets are a better bet than pure-play stocks after a two-year valuation surge, the sector's senior portfolio manager at ING Investment Management said.
Huub van der Riet, who runs three consumer funds with combined assets under management of around 450 million euros ($615 million), said he had cut his pure-play exposure to 8 percent from around 20 percent two years ago.
The funds comprise the near 265 million euro ING Invest Food & Beverages fund, the Prestige & Luxe fund, worth around 100 million euros, and the near-90 million euro Consumer Goods fund, which looks at discretionary-spend-focused stocks.
"Emerging markets valuations have gone up quite substantially, and it's becoming harder to find upside potential. You need to search more," he said. China's main blue-chip bourse has more than doubled in value since end-December 2008, while other emerging market bourses, such as Brazil's Bovespa, have also risen strongly.
However, total exposure to emerging markets still accounted for around two-thirds of the funds' AuM, he added.
"We are looking for companies that enjoy structural competitive advantage," he said. "They could be the lowest cost producer, have superior distribution channels or enjoy a superior brand, leading to pricing power. That's key for us."
Major bets across the three funds include 7.3 percent of the luxury fund in French firm Richemont, 9.4 percent of the food and drink fund in Swiss giant Nestle, and 7.5 percent of the discretionary fund in car firm Toyota, according to the funds' end-October factsheets.
While unwilling to highlight current picks for compliance reasons, Van der Riet said UK brewer SAB Miller, Danish drinks giant Carlsberg and British peer Diageo were all examples of firms with a strong emerging markets presence.
"European staples have significant exposure to emerging markets. Their roots are very deep there, which is clearly very positive as they enjoy superior distribution channels, which they've built over decades," he said.
That compares with U.S. firms, which generally have less exposure to emerging markets, he added.
Over the last five years, growth in sectors such as tobacco and household care had been negative in mature markets and positive in emerging markets, "with a gap of 500 basis points performance difference in top-line growth".
While pure plays -- stocks listed in the emerging market and primarily serving that emerging market -- were theoretically a better bet, the higher valuations meant they fell short on a discounted cash-flow analysis, he said. ($1=.7312 Euro) (Editing by Will Waterman)