aberdeen emerging markets - help to understand please

justme111

I been looking at this fund and I can not make sense of it's performance , if someone could kindly enlighten me please. Last 5 years show negative returns about 10% while last 10 years show 8fold positive return. What did happen about 5 years ago to so drastically change fund's performance ? I would understand if the whole stock market went down but it did not . What do I miss /misinterpret?

Linton

Almost every Emerging Market fund has performed badly in the past 5 years. Aberdeen EM has performed rather better than average.

Something particular didnt happen 5 years ago. It mainly happened 7-8 years ago!

The main reason is that EM countries are affected far more than the developed world by problems in the world economy. Two more detailed explanations come to mind:
- EM countries are more dependent on raw materials. These have been very badly hit in recent years by the uncertainties with whether Chinese manufacturing will continue to demand increasing amounts of raw materials..
- In uncertain times many investors look for safety and so move their money to the USA in particular which has done very well in the past 5 years.

Of course this doesnt mean that you should sell your EM funds and buy US, arguably the reverse is more appropriate - EM is cheap, US is expensive.

bigadaj

justme111 wrote: »

I been looking at this fund and I can not make sense of it's performance , if someone could kindly enlighten me please. Last 5 years show negative returns about 10% while last 10 years show 8fold positive return. What did happen about 5 years ago to so drastically change fund's performance ? I would understand if the whole stock market went down but it did not . What do I miss /misinterpret?

Your presumably looking at the wrong stock market.

Emerging markets did very well for many years, and Aberdeen were a good fund manager particularly in that area. More recently emerging markets have struggled, China has slowed down, people have become risk averse, Brazil has struggled etc etc

Look at it against its benchmark and that should give a better impression of relative performance.

steelbru

By "8fold positive return" do you mean a 700% rise ?

Are you talking about the Aberdeen Emerging Markets Equity Fund Acc ?

If so, then looking at the Morningstar chart for 10 years, then it says it's gone up 132% ( ie from 100 to 232 ), where are you seeing an 8fold increase ?

http://www.morningstar.co.uk/uk/funds/snapshot/snapshot.aspx?id=F0GBR04G73&tab=13

justme111

https://www.fidelity.co.uk/investor/research-funds/fund-supermarket/factsheet/summary-adv.page?UseProxy=Yes&idtype=SEDOL&fundid=3322756&UserChannel=Adviser+Linked&showwrapper=false
It say fund cumulative return since 2013 is 721%

Thank you very much people , it does help a lot in understanding what is happening and not feeling stressed because one does not.

Linton

The Fidelity website is wrong - suggest you check on Trustnet.

steelbru

Since July 2003 ( not 2013 - a typo I think ) then 721%, but 2003 until now is nearly 12.5 years, not 10 years ;-)

2003 - 2005 were boom years !