Emerging Markets funds

EdGasketTheSecond

LULULU1 wrote: »

Does anybody hold any on here ?

I got a couple of ETFs, EMDV and SEDY; both emerging market high dividend funds. I wouldn't say they have been a great investment but it all depends when you get in and out. Have a look at a long term chart and you'll see how they fluctuate. At least those two pay some income through bad times. The best gains were on Brexit due to the £'s drop lol.

Linton

EM covers a wide range of very different countries. The two main areas are SE Asia/Pacific which includes S Korea, Taiwan, China/Hong Kong, India and Frontier Markets - much of Africa and Latin America and the smaller countries in SE Asia. SE Asia has a broad range of industries: sometimes world class in high tech, manufacturing, consumer products and with an increasingly wealthy population served by a broad variety of consumer focussed companies. SE Asia (exc Japan) has its own sector but there tends to be significant overlap with EM.

By contrast Frontier Markets has a high % in the finance sector and not a lot elsewhere.

So in my view EM does not constitute a meaningful single market and it makes more sense to invest separately in the two areas. SE Asia should be a core part of one's portfolio. I cant see it dropping 90% in a slump. Frontier Markets is more of a side show where anything could happen.

Looking more into SE Asia/Pac there are two types of fund. One type focusses on the major well known companies - this categorisation would include the index trackers. The other type invests primarily in smaller potentially high growth companies. I believe a portfolio should contain both.

EM funds can vary significantly both in their geographic allocation and sector allocations. So you do need to look at what any candidate for your portfolio invests in. Some funds, I think, put too high a % in technology/IT - I prefer to have a significant % in manufacturing and consumer goods.

Finally, next to the UK, SE Asia appears to offer the best opportunities for income investors.

dunstonh

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?

Yes, there have been 80% plus drops previously. as mentioned above, EM covers a broad spectrum and over time, what was EM becomes developed equity. The US was considered an emerging economy for part of the 20th Century. Now it is developed. The same will happen with others.

Filo25

Linton wrote: »

EM covers a wide range of very different countries. The two main areas are SE Asia/Pacific which includes S Korea, Taiwan, China/Hong Kong, India and Frontier Markets - much of Africa and Latin America and the smaller countries in SE Asia. SE Asia has a broad range of industries: sometimes world class in high tech, manufacturing, consumer products and with an increasingly wealthy population served by a broad variety of consumer focussed companies. SE Asia (exc Japan) has its own sector but there tends to be significant overlap with EM.

By contrast Frontier Markets has a high % in the finance sector and not a lot elsewhere.

So in my view EM does not constitute a meaningful single market and it makes more sense to invest separately in the two areas. SE Asia should be a core part of one's portfolio. I cant see it dropping 90% in a slump. Frontier Markets is more of a side show where anything could happen.

Looking more into SE Asia/Pac there are two types of fund. One type focusses on the major well known companies - this categorisation would include the index trackers. The other type invests primarily in smaller potentially high growth companies. I believe a portfolio should contain both.

EM funds can vary significantly both in their geographic allocation and sector allocations. So you do need to look at what any candidate for your portfolio invests in. Some funds, I think, put too high a % in technology/IT - I prefer to have a significant % in manufacturing and consumer goods.

Finally, next to the UK, SE Asia appears to offer the best opportunities for income investors.

Linton, are there any interesting funds you found in the smaller cap Asia/Pacific area, certainly finding large cap funds isn't too difficult, but I have struggled a bit with finding suitable funds for small cap in the area, happy enough with my Frontier market fund as well

Voyager2002

LULULU1 wrote: »

Does anybody hold any on here ?

My investments are mainly in emerging markets... I take care to diversify as much as possible, and look for effective management. Usually I use Investment Trusts rather than Unit Trusts/Mutual Funds.

Linton

Filo25 wrote: »

Linton, are there any interesting funds you found in the smaller cap Asia/Pacific area, certainly finding large cap funds isn't too difficult, but I have struggled a bit with finding suitable funds for small cap in the area, happy enough with my Frontier market fund as well

My main SEAsia holding is an IT, Fidelity Asian Values. It has oughly equal %s in large, mid cap and small companies.

bostonerimus

LULULU1 wrote: »

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.

My exposure to EMs are through a cap weighted Global equity fund. I do not own any individual EM funds. I don't think that it's worth it.

coyrls

justme111 wrote: »

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

Certainly not universally:

https://www.trustnet.com/news/541779/only-a-third-of-emerging-markets-funds-outperform-over-five-years/
https://www.trustnet.com/news/542914/deverell-why-i-only-use-a-tracker-for-my-emerging-markets-exposure

ianthy

coyrls wrote: »

Certainly not universally:

https://www.trustnet.com/news/541779/only-a-third-of-emerging-markets-funds-outperform-over-five-years/
https://www.trustnet.com/news/542914/deverell-why-i-only-use-a-tracker-for-my-emerging-markets-exposure

When I read this I checked my 2 EM funds - 1 active Legg Mason EM and 1 passive with vanguard and during the Jan/Feb correction the Vanguard fund performed better. I know its not over a long period of time but the performance over 5 years is not vastly different and not enough to justify the difference in charges 1.05 V 0.27. Of course this may not apply to all EM funds.

Thrugelmir

Linton wrote: »

Finally, next to the UK, SE Asia appears to offer the best opportunities for income investors.

Potentially offer much better longer term prospects than elsewhere globally. The dominance of the Western world is finally waning. With the Middle Class in Asia growing rapidly.