Emerging Markets and Commodities

StevieJ

gozomark wrote: »

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

To reduce the risk in a risky environment.

psychic_teabag

gozomark wrote: »

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

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

Presumably a tracker is also affected by these, but tracker has less turnover and so is affected less by dealing charges. And I guess if the tracker holds everything, it gains as much as it loses from any corruption, whereas an active stockpicker is playing against a rigged game ..?

Reaper

gozomark wrote: »

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

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

The second point puzzles me. Surely an active manager should be aware of the dodgy areas and avoid them, whereas a tracker blindly goes ahead and invests regardless?

gozomark

you are assuming the dodgy areas are underperforming areas

gozomark

StevieJ wrote: »

To reduce the risk in a risky environment.

why not just invest less in the first place - thats even less riskier. Also, this type of strategy often works more in bull markets than bear, so you end up with a low beta return in a bull market, but a higher beta return in a bear market.

gozomark

psychic_teabag wrote: »

. And I guess if the tracker holds everything, it gains as much as it loses from any corruption, whereas an active stockpicker is playing against a rigged game ..?

exactly .....

Linton

gozomark wrote: »

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

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

Your evidence for this amazing assertion is??

Suggest you look on Trustnet. Compare this with the iShares MSCI EM ETF NAV which tracks the MSCI EM Index, the benchmark for Aberdeen.

Over 5 years the ETF return is 62% which would place it in the bottom 20% of all EM funds.

Over 3 years the ETF return is 14% which would place it in the bottom 10% of all EM funds.

gozomark

survival bias - poorly performing funds get closed down

Linton

Rubbish.

For that argument to be correct nearly half the funds around 5 years ago would have to have closed - and then that would only get the Index up to the 50% level.

Look at things from another point of view - now Trustnet lists 45 EM funds. For your argument to be correct there must have been some 50 or more funds in existance 5 years ago. So you are claiming the number of EM funds has DECREASED over the past 5 years - really?

gozomark

you are assuming no new funds launched, and no funds merged