A good Emeging Markets Tracker???

Totton

Or this ETF - iShares plc MSCI Emerging Markets (IEEM) with a TER of 0.75% and available at HL.

Regards,
Mickey

Linton

Look at the 5 year return

Ishare IEEM ETF - 76%
Aberdeen EM Managed Fund - 151%

I know some people have a principled objection to managed funds, but to go for an Emerging Market tracker really is taking your principles seriously!

Linton

SteveSilva wrote: »

Anyone know of such a tracker? I had a look at Aberdeens Emerging Market performance chart compared to its sector, and it simply tracked the Index. Only out performing it during the last couple of years. So is there a tracker with similar results but lower charges?

Where do you get your data from?? When I look at the 5 year graph on Trustnet it shows Aberdeen 5 year return as 151% and the sector average as 87%. Hardly simply trackng the sector average.

atush

SteveSilva wrote: »

Anyone know of such a tracker? I had a look at Aberdeens Emerging Market performance chart compared to its sector, and it simply tracked the Index. Only out performing it during the last couple of years. So is there a tracker with similar results but lower charges?

You want a tracker, but are upset it is tracking the sector? Then you don't want a tracker, you want managed.

Aberdeen EM looks good to me, and consistantly performs well against others. I don't hold this one( I hold their Asian SC) but have considered it.

Ark_Welder

I think what the OP is saying is that for the first 2 years on the 5-year chart the Aberdeen fund's performance was very close to the sector average. Comparing just over the last year shows similar relative performace to the average.

However, the reason for the outperformance of the fund over 5 years is because the fund lost less than its peers when the markets were falling in 2008/09. This is where paying for the skills of a quality manager can pay off: anyone can buy into a rising asset or sector and make money, but how they cope when prices are falling is where true skill can shine. That, or they could just have been lucky with their timing, so a read of the annual reports for the years leading upto, and into, the falls could give an indication to the manager's thinking around the time. We can use our hindsight to discover whether the manager had good foresight, or just good fortune.

Using Trustnet's charting tool to compare against the FO Equity - Emerging Markets sector shows sector perfomance over 10 years of 264% and for the fund, 464%.

No guarantee of future performance, but an example of what a quality managed fund may be able to provide. Has the fund manager changed during this time? Something to look for when reading the annual reports to get an idea of why the fund has performed as it has over the years.

[edit]
This does not mean that an investor should not use an index tracker if that is their preference, just that they should accept that their fund may underperform others over longer periods.

neilp

The Legal & General global emerging markets is available on Hargreaves Lansdown, and without the 0.5% additional charge that applies to some (usually tracker) funds.

oldtoolie

I've been looking into this myself and my conclusion on reading a wide range of advice is: index trackers in the developed world, managed funds in the emerging markets. I'll invest in trackers for the so-called developed world presuming that the market there is efficient enough to make it difficult to select a successful managed fund that beats the market. In the emerging markets, share values are not so transparent, so the managers knowledge will pay off. I suppose we will know who's right in a few years.

temagami

I'd agree that investors might want to think twice about whether a tracking strategy is best for emerging markets.

There are a lot of problems with index composition in most EMs that makes tracking a questionable strategy. You often get a very lopsided index, heavy on finance and energy and very light on consumer sectors and healthcare, for example. You'll also often be buying into state-controlled firms or those run by a small group of local business heavweights or families.

In contrast, I think most interesting area of EMs in many cases in the medium-to-small cap end of the market. Under-researched and great potential for active management to outperform.

However, there is a problem ...

EM managed funds don't necessarily do any better, because many of them are trackers in all but name and with higher fees. Too many managers don't take views different enough from the benchmark to really affect the outcome - if the benchmark has 2% consumer staples, they are not going to be running with 30% in that sector. They might have 5% and call that overweight - and that's not enough to make any meaningful difference.

As a rule of thumb, the funds from the most mainstream fund groups and the ones with the glossiest advertising are the worst offenders in this regard.

So picking a managed EM fund is not totally straightforward - to be worth the extra fees, you need managers who are genuinely trying to do something different to the market.

For what it's worth, I like the Aberdeen team's approach. First State also have some good stuff. atush mentions the Aberdeen Asian Smaller Companies - in the same bracket, First State's Scottish Oriental Smaller Companies is worth a look.

deadpeasant

Nobody has anything to say for the Templeton EM investment trust? Not a tracker of course, but lower charges I think than Aberdeen.

Monevator had a post on EM trackers in December. I can't post a link but if you put monevator emerging markets into google you'll get it.

atush

my statement came today and I think I am up 243% on Aberdeen asian smaller companies. I knoew i was up but tbh as a buy and hld i haven't paid too much interst as I wasn't thinking of selling that.

I have to say my Investment trusts are doing better than my shares lol.