Emerging Markets and Commodities

masonic

Reaper wrote: »

I would agree which is why I have long been puzzled by what the generally reliable Candid Money says:

In theory active managers are likely to have greater success in smaller, less efficient, markets such as smaller companies and developing economies, so the argument for trackers in these markets is less clear cut. While this just about seems to hold true for smaller companies, many emerging markets active managers do underperform so the case for active management here is less convincing.

That does not sound right to me - personally I use Aberdeen Emerging Markets and their performance is consistently above the benchmark as you can see here (change the timescale to "Since Launch" for the full picture):
http://www.trustnet.com/Tools/Charting.aspx?typeCode=FAFEMA,XO:GLBLEMER
Based on that I am happy to pay the extra fees for a well managed fund.

The argument, as written, seems to be that because there is a higher proportion of underperforming managers, an investor is more likely to pick one of those. However, the underlying assumption driving the argument is that these underperforming managers cannot be differentiated from the overperforming ones. Even if a tiny minority of fund managers are able to overperform consistently, and they can be identified, then it makes no difference how many bad ones there are.

boltneck123

wrong place

experience08

boltneck123 wrote: »

wrong place

Huh? For what?

boltneck123

I started a new thread instead, didnt want to take this one off topic abit

experience08

boltneck123 wrote: »

I started a new thread instead, didnt want to take this one off topic abit

Oh right, about the Ukrainians.

masonic

12tonelizzie wrote: »

I genuinely want to learn how to identify them. I can find books and websites that simply and clearly show me how to be an index investor. But I can't find any instruction on how to identify the reliably overperforming funds.

You can use sites like Trustnet, Bestinvest and Citywire to research managed funds. As well as the raw performance data, Trustnet will show you a lot of statistical measurements about the fund like 'alpha', 'beta' and 'info ratio' and has a good write up of what these mean. Another important thing to look at is the track record of the fund manager. You can also research that at the same sites.

This is something you need to monitor on an ongoing basis if you decide to purchase a fund, since circumstances change (e.g. a fund manager could be changed), so it is not the same as buying a tracker and just having to worry about rebalancing it once a year.

psychic_teabag

gozomark wrote: »

I used to be a fund manager in emerging markets (for 15 years) - I would go tracker over managed

Could you elaborate on that a little ?

StevieJ

I like First State in Asia and Emerging Markets, they seem to be more defensive so have a some downside protection.

gozomark

emerging market fund managers tend to underperform their benchmarks - why ?

1. high dealing charges
2. insider trading in many emerging markets by local conglomerates

gozomark

StevieJ wrote: »

I like First State in Asia and Emerging Markets, they seem to be more defensive so have a some downside protection.

if you like emerging markets, why would you buy a more defensive emerging markets fund ?