Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Barrons likes Matthews Asia Growth & Income MACSX, but I think Matthews Asia Dividend MAPIX is at least as good, but unfortunately closed. Both have had some manager additions of late.
I like MAPIX and MACSX as much as anyone, but they are NOT emerging market funds. They DO have some EM stocks, and many of their holdings generate a lot of revenue from Pacific EM countries. So maybe they can be considered a 'chicken' way to invest in EMs. A number of other funds have a large chunk of holdings in developed markets - NEWFX, CNWIX, SFGIX, and others have 40% or more in developed countries. Just something to keep in mind when making an EM decision. Do your homework.
The author announces, without supporting argument, that "active management is arguably the best way to go when investing in emerging markets" (the SPIVA data isn't supportive here) and recommend Harding Loevner EM (HLEMX) and Thornburg Developing World (THDAX). She appears to have interviewed Morningstar's senior international-funds guy, William Samuel Rocco, for the story.
As BobC notes, there's also passing endorsement of non-EM funds (Matthews and American New World) with EM exposure.
The author laments her inability to find managers with sufficient experience, which she simply translates at "lots of funds with short track records." Sadly, she doesn't think to ask about whether the managers of those funds have short records. Her failure to ask, or even to know that she needed to ask, that question allows her to ignore Grandeur Peak, Seafarer and William Blair EM SC.
I work with a lot of reporters, often behind-the-scenes, and I'm saddened by the number who come into a story cold (it's their second mutual fund story ever, maybe their first story on some obscure category and they don't even recognize the players' names) and on a short deadline. They often strike me as really bright people who are working incredibly hard, but the deck is really stacked against them and their readers.
Reply to @David_Snowball: Hard to find quality mutual fund writers like the late Chet Currier of Bloomberg, they are becoming few and far between. Regards, Ted
"Regular readers know that I'm often a proponent of indexing, and it's unlikely you'll go wrong over the long-term with an indexing strategy. If that's your preferred route, the broadest emerging-markets index ETF is the $38 billion iShares MSCI Emerging Markets (ticker: EEM), though its annual fee of 0.67% makes it pretty pricey for an index ETF."
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Specifically, if ER is an issue, then why not VWO, which is fairly broad (tho' I guess you could quibble re: treatment of S Korea), and has an ER of 18 bps. Cheap enough for you? Or ... SCHE or IEMG.
BobC, Good point, and I was surprised to see how much developed market stocks EM funds held.
The odds are not quite as bad as one might guess from your post, though, at least if one sticks to funds that are supposed to be EM. I looked at M*, using the "monkeys throwing darts" approach (i.e. just looking at percentages, and not caring about which were the better funds).
By category, the percentages of distinct funds that have over 60% EM exposure are:
Diversified EM (153/176): 87% Diversified Pacific/Asia (0/11): 0% (the only fund that comes close is GKEAX) Misc. Region (8/17): 47% - but see NOTE below China Region (19/28): 68% - the funds that missed had big holdings in Taiwan and/or HK Latin America (10/10): 100% Pacific/Asia x-Japan (10/31): 32%
There is some ambiguity in the Asian funds. M* considers Korea and Taiwan developed countries. MSCI considers them EM (at least until later this year).
HK is considered by all to be a developed "country", but as BobC suggested, these companies may be deriving much of their revenue from the rest of China.
I didn't include broad based and European funds because those are obviously mostly developed country funds (though there are a few that hover around 40% EM). Nor did I include Indian or Japanese, because these too are self-evident.
NOTE: Misc. region is a grab bag of mostly individual country funds. Whether they are EM or not is obvious from the name (unlike the Asian funds). So the percentage here is meaningless. As above, one may ask whether Matthews Korea is EM or not.
There are a few (4) funds focusing on Africa. They all pass the 60% threshold, though two, from TRP barely so (66%). The TRP fund is getting double counted. Unlike other funds that offer the same fund in retail and institutional classes, TRP offers two clones, so what is virtually, but not literally, the same fund gets counted twice.
MFMPX for E M / Frontier exposure.Load waived @ Schwab & T D Amer "The Portfolio remains overweight such countries as Saudi Arabia, Laos, Pakistan, Romania and Panama where there is sustainable reform-led growth and reasonable inflation. Kuwait, Kazakhstan and Oman remain the Portfolio’s largest country underweights relative to the index. "
Those of us who owned the Morgan Stanley Frontier Markets CEF, FFD, now own shares of MFMPX, but the symbol is MFMIX. FFD was open-ended in 2012. After looking at a listing of all the share classes of this fund, I see why there are thousands of MFs on the market. Holders of the MFMIX shares now have to cough up a cool million to purchase more. I'm grateful to learn that I can add to my holding NTF by buying MFMPX, which appears to be the same fund. Neither Schwab nor TDA reps suggested this when I asked about buying more after the open-ending.
Comments
Accch. OK, Just read your added note. Google....
As BobC notes, there's also passing endorsement of non-EM funds (Matthews and American New World) with EM exposure.
The author laments her inability to find managers with sufficient experience, which she simply translates at "lots of funds with short track records." Sadly, she doesn't think to ask about whether the managers of those funds have short records. Her failure to ask, or even to know that she needed to ask, that question allows her to ignore Grandeur Peak, Seafarer and William Blair EM SC.
I work with a lot of reporters, often behind-the-scenes, and I'm saddened by the number who come into a story cold (it's their second mutual fund story ever, maybe their first story on some obscure category and they don't even recognize the players' names) and on a short deadline. They often strike me as really bright people who are working incredibly hard, but the deck is really stacked against them and their readers.
My weekly grumble,
David
Regards,
Ted
"Regular readers know that I'm often a proponent of indexing, and it's unlikely you'll go wrong over the long-term with an indexing strategy. If that's your preferred route, the broadest emerging-markets index ETF is the $38 billion iShares MSCI Emerging Markets (ticker: EEM), though its annual fee of 0.67% makes it pretty pricey for an index ETF."
--------------------------------
Specifically, if ER is an issue, then why not VWO, which is fairly broad (tho' I guess you could quibble re: treatment of S Korea), and has an ER of 18 bps. Cheap enough for you? Or ... SCHE or IEMG.
ETFDb link:
http://etfdb.com/etfdb-category/emerging-markets-equities#expenses
The odds are not quite as bad as one might guess from your post, though, at least if one sticks to funds that are supposed to be EM. I looked at M*, using the "monkeys throwing darts" approach (i.e. just looking at percentages, and not caring about which were the better funds).
By category, the percentages of distinct funds that have over 60% EM exposure are:
Diversified EM (153/176): 87%
Diversified Pacific/Asia (0/11): 0% (the only fund that comes close is GKEAX)
Misc. Region (8/17): 47% - but see NOTE below
China Region (19/28): 68% - the funds that missed had big holdings in Taiwan and/or HK
Latin America (10/10): 100%
Pacific/Asia x-Japan (10/31): 32%
There is some ambiguity in the Asian funds. M* considers Korea and Taiwan developed countries. MSCI considers them EM (at least until later this year).
HK is considered by all to be a developed "country", but as BobC suggested, these companies may be deriving much of their revenue from the rest of China.
I didn't include broad based and European funds because those are obviously mostly developed country funds (though there are a few that hover around 40% EM). Nor did I include Indian or Japanese, because these too are self-evident.
NOTE: Misc. region is a grab bag of mostly individual country funds. Whether they are EM or not is obvious from the name (unlike the Asian funds). So the percentage here is meaningless. As above, one may ask whether Matthews Korea is EM or not.
There are a few (4) funds focusing on Africa. They all pass the 60% threshold, though two, from TRP barely so (66%). The TRP fund is getting double counted. Unlike other funds that offer the same fund in retail and institutional classes, TRP offers two clones, so what is virtually, but not literally, the same fund gets counted twice.
And let's not forget Greece, which only MSCI downgraded to an EM last year. So it too isn't in funds tracking other indexes.
Edit: Your suggestion of IEMG is not only cheaper, but broader. It covers Laos, which is not in the MSCI EM index tracked by EEM.
Regards,
Ted
http://www.zoominfo.com/p/Beverly-Goodman/8170633
"The Portfolio remains overweight such
countries as Saudi Arabia, Laos, Pakistan, Romania and
Panama where there is sustainable reform-led growth
and reasonable inflation. Kuwait, Kazakhstan and Oman
remain the Portfolio’s largest country underweights
relative to the index. "
http://www.morganstanley.com/msamg/msimintl/docs/en_US/common/fund_comm/msif/frontier_emg_mkt.pdf
http://quotes.morningstar.com/fund/f?t=MFMPX®ion=usa&culture=en-US
Emerging markets 2014 outlook: Shaping the next decade. Mark Mobius
http://www.investmenteurope.net/investment-europe/opinion/2321645/emerging-markets-2014-outlook-shaping-the-next-decade
Africa Primer
http://seekingalpha.com/article/1954601-kenya-ivory-coast-nigeria-and-ghana-the-african-kings?source=feed