Does Your Global Fund Have Emerging Market Exposure?

Think your global equity fund is living up to its name? We reveal global equity funds' economic exposure to emerging markets

Jeffrey Schumacher, CFA 1 August, 2017 | 12:46PM

Global-equity funds often benchmark themselves against the MSCI World Index. This index consists of 1,646 mid- and large-cap stocks across 23 countries and covers approximately 85% of the market capitalisation in each country. Although this seems to be a fair representation of the global opportunity set, one arguably crucial region is missing: emerging markets.

While emerging-markets countries are not part of the MSCI World Index, global-equity fund managers often have the flexibility to dip into these to get direct exposure to their fast-growing, but also tricky, economies, either to boost returns or for diversification purposes.

Limited Direct Emerging-Markets Exposure

We analysed 112 actively managed open-end and closed-end funds and passively managed exchange-traded funds that carry a Morningstar Analyst Rating. Most of the funds in this sample invest directly in emerging markets, albeit often at the margin.

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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.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
BHP Group PLC24.56 CHF0.00
British American Tobacco PLC2,677.00 GBP0.00
HSBC Holdings PLC404.85 GBP0.00
Murray International Ord1,088.06 GBP-0.72

About Author

Jeffrey Schumacher, CFA  is fondsanalist bij Morningstar Benelux

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