Emerging Markets funds

LULULU1

Im looking to invest in an emerging market fund and Fidelity Emerging Markets W Acc seems to have done well last year.

Just wondered if anybody else held this and their views.

I appreciate the world could "go to hell in a hand car" at any time but wondered if it could go better in emerging markets.

Thanks

dunstonh

The important thing with Emerging Market funds is not what they did last year.

I appreciate the world could "go to hell in a hand car" at any time but wondered if it could go better in emerging markets.

And periodically, it tends to do so with emerging market funds. You are looking at 90% loss potential.

LULULU1

I guess thats the risk you take with any investments. I appreciate its one of the higher risk ones.

I just think that with USA and UK being at record high it might be worth a small investment.

Didn't realise how many funds there were until just recently and the difficulty of pick one.

Even the basic of having an active or Passive funds requires lots of thoughts and everyone has different ideas.

justme111

emerging markets are universally agreed to be better catered for by managed funds

LULULU1

Thanks for your thought.

I guess this is because they are potentially more ear to the ground.............

Audaxer

dunstonh wrote: »

You are looking at 90% loss potential.

Wow, I didn't realise EM funds could drop that much in a crash. If you saw your EM fund drop 90% would you know whether it was a just a poor performing fund or whether it would be good time to rebalance your portfolio by investing more in it?

Tcquins

Emerging Markets funds are the higher risk end of geographic asset allocation. This is because most companies in emerging markets are more sensitive to the global economy, less mature companies with lower cash reserves and are exposed in times of currency and interest volatility. Not to mention political risk is far higher.

You!!!8217;ll find that consistency is lacking from year to year between EM funds, prescisely because of the wax and wane of country economic performance.

There are also higher risk emerging markets funds and slightly less high risk funds. The spectrum is very wide as some fund managers have very concentrated cyclical holdings, some for a more diverse, quality driven attitude (which has performed less well of late).

Take some time to pick a fund carefully. Picking one on solely last years performance is not a good idea.

LULULU1

Does anybody hold any on here ?

Superscrooge

There is nothing wrong with putting some of your investments into emerging markets as long as you understand the risks.

I've got some investments in Fidelity Index Emerging Markets. The last two years have produced excellent returns (approx 34% and 25%). This year might be another bumper year, or it might be a huge loss. But as it's only a small percentage of my investments, it's a risk I'm prepared to take

bostonerimus

What's your overall asset allocation? You need to have a well diversified portfolio and EM should probably only be a small part of that.....maybe 10%. I'd go for a low cost EM tracker if I was going to overweight this sector, but I don't bother as my EM investment comes from a cap weighted global ex USA tracker fund. As the EM market cap grows/falls so will my investment in it.

LULULU1

Its about 10% so within my risk tolerance.

Can you explain this bit please......

'd go for a low cost EM tracker if I was going to overweight this sector, but I don't bother as my EM investment comes from a cap weighted global ex USA tracker fund. As the EM market cap grows/falls so will my investment in it.