3 Top Emerging Markets Funds

Emerging markets may be volatile, but investment professionals are good at taking on the risk so you don't have to. Here are three of the best emerging market funds

Emma Wall 27 February, 2014 | 9:05AM
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Emerging markets have been in a bear market since the global recession, meaning prices are now depressed and make a worthy entry point. Not only to stock markets look historically cheap, but compared to developed markets which have rallied significantly over the past couple of years, China is relatively cheap too.

Here are three funds - two open-ended and one closed-ended - which offer you the chance to make great returns. Just hold onto your hats, the ride may be a little bumpy.

Aberdeen Emerging Markets Equity Fund

This Morningstar analyst Gold Rated fund is a strong choice for emerging-markets equity exposure. The bottom-up process reflects the team members' strong emphasis on finding value and quality. In their view, quality firms exhibit sustainable, competitive business models, strong balance sheets, high returns on assets and capital, and good corporate governance. As a result, the team favours Hong Kong-domiciled companies to gain exposure to China’s growth as corporate governance is typically stronger there.

First State Global Emerging Markets Fund

Like Aberdeen’s, this Gold Rated fund is soft-closed but you can still access it through an investment platform. The quality of the fund’s management team is one of the most experienced and capable there is, says Morningstar analyst Amaya Assan.

The team focus on delivering solid long-term results while keeping risk in check and to this end, they look for firms with sustainable drivers of earnings growth but which are attractively valued. 

Templeton Emerging Markets (TEM)

This Bronze Rated trust has weathered several storms and we think it’s well placed to continue. Analyst Jackie Beard said that she was confident in Dr Mark Mobius’ management skills – who has been at the firm since 1987 and he has built a strong and loyal team there. His process focuses on finding long-term value in a company that’s not yet priced in. The team doesn’t ignore the macro and it doesn’t stop investment in a particular country, but they try to look beyond short-term noise.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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About Author

Emma Wall  is former Senior International Editor for Morningstar