Biggest and Best Emerging Market Funds

Emerging market investors had a difficult time in 2014, with returns lagging developed markets. But things have begun to pick up - check out these funds for portfolio ideas

Simon Dorricott 3 July, 2015 | 8:00AM
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The Biggest Emerging Market Funds

Comgest Growth Emerging Markets is run by a highly experienced team of three managers; Vincent Strauss, Wojciech Stanislawski and Emil Wolter. Strauss and Stanislawski have managed this strategy for over 10 years and are supported by a large team of analysts. They adopt a strategy that is longer term in nature and focuses on businesses with high profitability and the ability to grow those profits independently of the economic cycle. The fund often bears little resemblance to mainstream indices or peers and generally excludes stocks from cyclical sectors and banks. The fund is Gold rated by Morningstar.

The Aberdeen Global Emerging Markets Equity Fund has Devan Kaloo, Adrian Lim and Chou Chong listed as its managers, but this product is managed in line with the house approach that is very team orientated. The emerging markets team is well resourced and includes individuals with a wide range of experience levels.

Stock research focuses on companies with strong balance sheets and sustainable business models, producing high returns on assets. A longer-term, buy and hold approach is adopted, and deviations from benchmark allocations can be significant. The fund is Silver rated by Morningstar.

Vontobel Emerging Markets Equity fund is managed by Rajiv Jain who is the group CEO and has been responsible for the fund since 1997. Over this time Jain has implemented a consistent investment approach that focuses on high-quality growth stocks that produce high returns on equity and exhibit pricing power.

The focus on steady, dependable earnings growth tends to result in a significant bias to consumer defensive stocks, with limited exposure to more cyclically sensitive industries. The fund is Silver rated by Morningstar.

Best Performing Funds Over Three Years

The listed managers for the Templeton Emerging Markets Smaller Companies fund are Dennis Lim, Mark Mobius and Tom Wu. However, these three are mainly involved with overseeing the investment process. Day to day management is conducted by Chetan Sehgal and Vikas Chiranewal, both of whom have worked on the fund since 1997.

The approach is bottom-up and focuses on stocks that appear cheap relative to their five year projected earnings growth. Particular attention is paid to financial leverage. The fund is rated Bronze by Morningstar.

The Hermes Global Emerging Markets fund was launched in December 2008, but has only been managed by Gary Greenberg, head of emerging markets, since 2011. The fund combines top down and bottom-up inputs. Quantitative and qualitative inputs are used to identify attractive countries from a growth perspective, while bottom-up stock research focuses on quality, momentum and valuation. The fund tends to show blend style characteristics overall and aims to outperform the MSCI EM Index by 2-4% pa on a rolling 3 year basis. 

JPM Emerging Markets Small Cap Fund has been managed by Amit Mehta since early 2012. He focuses on stocks with a market-cap below $3 billion and prefers higher quality names that are able to produce a sustainably high ROE, with low gearing. The manager follows the house investment approach that looks to analyse four key components of equity returns; earnings growth, dividend, change in valuation and currency. The fund is benchmarked against the MSCI Emerging Markets Small Cap Index.

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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Simon Dorricott  is a Senior Fund Analyst for Morningstar