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With the Fed apparently on hold for a period of time Im curious if anyone is adding to their EM holdings and if so which funds... I currently hold Seafarer. Thx.
Hi @MikeW: I have two emerging market funds with the American Funds Group. One is their New World Fund (NEWFX) which I have owned for better than ten years. The other fund of theirs that I own is their Developing World Growth & Income Fund (DWGAX). I recently purchased my first buy step (of four) in this fund and I plan to continue to add to it through a postion cost average approach until I have the position fully built.
I have other funds that I own that have some exposure to emerging markets; but, these are the two funds that I own that are considered to be emerging market specific.
Also, I found an interesting article written about emerging market funds that might be of some interest. It is linked below for easy reference..
Hi @MikeW: I have two emerging market funds with the American Funds Group. One is their New World Fund (NEWFX) which I have owned for better than ten years. The other fund of theirs that I own is their Developing World Growth & Income Fund (DWGAX). I recently purchased my first buy step (of four) in this fund and I plan to continue to add to it through a postion cost average approach until I have the position fully built.
I have other funds that I own that have some exposure to emerging markets; but, these are the two funds that I own that are considered to be emerging market specific.
Also, I found an interesting article written about emerging market funds that might be of some interest. It is linked below for easy reference..
Thanks very much for sharing your holdings Skeet. New World fund is one I'm evaluating now also. Can I ask how you plan the timing of your buy steps into your funds? Is this something that you plan to do once on the same day each month until you get thru the 4th buy step? Or do you plan based on your market barometer and when its giving you a undervalued rating?
@MikeW: Thank you for your question(s). Here is how I govern my buys.
I have a good number of positions within my portfolio that I consider to be under construction and which I'll add to these positions as money becomes available from income generation from within the portfolio itself. Usually, I'm buying somewhere monthly. DWGAX is one the twelve funds considered to be under construction and on my open to buy list. Once, a fund reaches a certain size within its respective sleeve then I consider it fully built. While DWGAX is only one fouth complete I have other funds that are close to being fully built with the next buy step completeting the building process. When a fund becomes fully built then it is removed from my open to buy list. I adjust my open to buy list at least annually. When it comes time to buy I simply look at how much money is available at the time and then choose where to invest this money based upon certain guidelines. Currently, my new money focus is on income generation over growth of capital.
An example: In the month of Feburary I plan to buy the second buy step in PONAX and the final buy step in PMAIX. PONAX will remain on my buy list while PMAIX will become fully built and will be removed from the buy list. Come March I'll again look to see how much residual cash I have and then I'll look through my buy list to see where I'll do some buying keeping in mind my income focus goal. As it stands now ISFAX will beome my March buy thus completing its final step buy.
I use my market barometer and equity weighting matrix more to drive my spiff sleeve and to adjust my equity weigting (from time-to-time) based upon the barometer and the equity weighting matrix's reading. Since, I have been moving to a new asset allocation model of 20% cash, 40% income and 40% equity this, new allocation, requires me to reduce my equity exposure by another couple of percent. Remember, equities have had a good run in January. Thus, I have been limiting buys in the equity area of my portfolio and directing new money elsewhere. With this, although DWGAX is on the open to buy list it might be awhile before it sees any new money. This is not because DWGAX is not a good fund but more with I am currently more focused on income generation over growing my capital.
I hope this explains in some detail how I do things and might offer up some ideas for you to consider.
@MikeW: I think value should make a comeback and also that TRP has the resources to support this fund. Quite a few prognosticators have picked EMs to do well in coming years, so I'm following them. Seafarer's value fund hasn't shown much yet, but others have commented favorably on it.
@Old_Skeet, thanks very much for sharing your thoughtful process. I appreciate it. I had to sell off a number of funds at the end of last year for tax purposes so I'm trying to plan a strategy for reinvesting these funds. Dollar cost averaging into new funds over several months seems reasonable to me and it seems like this is what you are also doing. I have been waiting for a sell-off to resume in the New Year but obviously this hasn't happened yet. So I probably need to start putting these funds back to work. Would you mind giving us a market barometer update in the near future?
@MikeW: As you requested here are my thoughts along with a barometer report. As of market close today Old_Skeet's market barometer which follows the S&P 500 Index indicates that the Index ... based upon its metrics ... is in the overvalued range on the barometer's scale with a reading of 140. With this, Old_Skeet would not be a buyer of the Index at this time. Coming off the December lows the Index has gained more than half of what it lost from its recent high. I'm thinking the next half will take a good bit longer to regain what was lost.
The time to have been a buyer of the Index based upon the metrics of the barometer was during the last week of December and first week of January. Back then the barometer had reading of 182 and 183 respectively indicating that the Index was extremely oversold and due for a rebound (or throw back rally).
Remember, a higher barometer reading indicates there is more investment value in the Index over a lower reading. In addition, there has been a recent increase in short interest for SPY over the past week or so. So, as the Index has recovered and risen in its valuation some investors are now increasing their short positions in the Index over the past couple of weeks. Short interest as measured in the number of days to cover has risen from 1.1 days to cover to 1.8 days.
I'm thinking ... and, this is just a scientific wild ass guess (SWAG) ... we will see the markets pullback some once we get through 4Q2018 earnings and revenue reporting. After all, forward earnings growth projections for the Index have, of late, been on the decline. Also, remember there is a lot of "hot" money that frequently gets reposition in the markets form time-to-time through computerized trading systems. Since stocks have recently had some good upward momentum during January here comes (or came) the fast money. And, how long will it be before the FOMC again begins to bump interest rates? They are still low by historical standards and I'm thinking although they say they are on hold for now their actions might be quite different in a few months, or so. Perhaps, they have raised to far and to quickly and this is the true reason for their pause.
For me, I'm watching the yield on the US10Yr Treasury as a clue of what might be ready to happen with stocks. Today, it closed with a yield of 2.64% which is way down from its October high yield of around 3.23%. Seems, the US10yr is still in good demand. Since, bond values and their yield generally move in opposite direction of one another ... Well ... I'm thinking ... the time to again become a buyer of stocks will be when investors begin to flee bonds and their yield begins to rise. Right now cover seems to still be sought by some investors with their demand for bonds.
So, emerging markets just might be the near term ticket since both domestic stocks and bonds seem to be overbought, from my perspective, and explains why they are catching investor interest. After all, both of my emerging market funds are up nicely thus far this year and their P/E Ratios are quite low compaired to other choices. Plus, they are both off their 52 week highs by better than 10%. Remember, though, the hot money crowd also chases after opportunity.
Recently started positions in both iras for GQGPX, run by manager Rajiv Jain who left Virtus to start his own boutique firm in 2016. Owned his Virtus fund for 5 years prior to his leaving and it had an excellent record there. David highlighted his fund recently. I also own GSIHX which he subadvises, that one has a small portion in emerging markets, mainly foreign large growth.
I initially bought GQGPX at td Ameritrade last year until it was available Fidelity late 2018. Am adding to it each month.
Numero uno thought: The chicken's way (my way a lot of the time in equity) to go in EM stock is EEMV, the iShares minimum volatility etf.
Numero dos: for investors who own multisector and/or global credit funds, there's likely a chunk of EM debt in those funds to consider in portfolio allocation. Much of the time, EM debt and equity march to the same drummer (the strength of the U.S. $, for example).
A few funds i'm interested in; PRIJX (T. Rowe Price Emerging Value) and BEFAX (BlackRock Emerging Markets Equity Strategies). I have a position in PRIJX.
@Old_Skeet , Thanks very much for providing your market barometer. I always enjoy getting your market updates as it aids with my planning. I also appreciate the information on increase in short interest. The market has certainly had a nice run here since the day before Christmas. Unfortunately, I lacked the cohones to add to positions when it felt like staring into the abyss. Both the Fed actions and the Chinese adding liquidity have certainly calmed fears and led to the risk on moves. I am thinking that I will select 1-2 EM funds and start building positions as I have very low exposure right now.
@thundley459 and @slick, thanks for sharing your thoughts on GQGPX and also PRIJX. Morningstar doesn't cover either. Can I ask what draws you to PRIJX? I see that its a top performer over the last 3 years. For GQGPX, I'm assuming Rajiv Jain's track record is the driver. thanks so much.
@AndyJ and @davfor.. thanks for providing your funds too.
Another way to play EMs is in MIOPX, Kristian Heugh's MS foreign growth fund. Current holdings show about 38% developing markets and he tends to concentrate his holdings.
A more mild-mannered, more tame idea: PRIDX. Not a real EM fund, not even close. It's "smid." 10.48% in the Americas. Half of that is in Latin America. Europe Emerging: ZERO. Asia Emerging 14.08% So, it's about 20% EM. ...I'm sticking with it, after grabbing and re-deploying profit.
I’ve always been leary of EM equity funds. Perhaps unjustified - but it relates to approximately 35 years ago when a fee-based advisor moved me (and his other clients) from TEMWX, which at the time was a great fund, into TEGOX*, Templeton’s new EM fund. (At that time it represented 100% of my assets.) His stated reason was that the latter would outperform. But it never did as long as I was with him and Templeton. The first had lower fees and an enviable track record. Much easier to “digest” during falling markets. The second had high fees and poor erratic performance at that time.
I do like to own some EM bonds however. Currently own PREMX. I perceive them less risky than EM equities and still offering potential above average long term return. A big reason they’ve spiked recently is in response to the Fed’s 180-degree change in posture and the subsequent pullback in the dollar vs many foreign currencies. As for EM equities, many globally diversified equity funds commit anywhere from 5-25% of their assets to EM equities. (Read Prospectus / Fund Report.) Gets you the EM equity exposure while leaving the harder part (where, when, how much to commit) to the managers.
Comments
I have other funds that I own that have some exposure to emerging markets; but, these are the two funds that I own that are considered to be emerging market specific.
Also, I found an interesting article written about emerging market funds that might be of some interest. It is linked below for easy reference..
https://www.morningstar.com/articles/740785/5-top-emergingmarkets-funds-that-look-beyond-emerg.html
thanks for sharing the article too.
I have a good number of positions within my portfolio that I consider to be under construction and which I'll add to these positions as money becomes available from income generation from within the portfolio itself. Usually, I'm buying somewhere monthly. DWGAX is one the twelve funds considered to be under construction and on my open to buy list. Once, a fund reaches a certain size within its respective sleeve then I consider it fully built. While DWGAX is only one fouth complete I have other funds that are close to being fully built with the next buy step completeting the building process. When a fund becomes fully built then it is removed from my open to buy list. I adjust my open to buy list at least annually. When it comes time to buy I simply look at how much money is available at the time and then choose where to invest this money based upon certain guidelines. Currently, my new money focus is on income generation over growth of capital.
An example: In the month of Feburary I plan to buy the second buy step in PONAX and the final buy step in PMAIX. PONAX will remain on my buy list while PMAIX will become fully built and will be removed from the buy list. Come March I'll again look to see how much residual cash I have and then I'll look through my buy list to see where I'll do some buying keeping in mind my income focus goal. As it stands now ISFAX will beome my March buy thus completing its final step buy.
I use my market barometer and equity weighting matrix more to drive my spiff sleeve and to adjust my equity weigting (from time-to-time) based upon the barometer and the equity weighting matrix's reading. Since, I have been moving to a new asset allocation model of 20% cash, 40% income and 40% equity this, new allocation, requires me to reduce my equity exposure by another couple of percent. Remember, equities have had a good run in January. Thus, I have been limiting buys in the equity area of my portfolio and directing new money elsewhere. With this, although DWGAX is on the open to buy list it might be awhile before it sees any new money. This is not because DWGAX is not a good fund but more with I am currently more focused on income generation over growing my capital.
I hope this explains in some detail how I do things and might offer up some ideas for you to consider.
I wish all "Good Investing."
Old_Skeet
The time to have been a buyer of the Index based upon the metrics of the barometer was during the last week of December and first week of January. Back then the barometer had reading of 182 and 183 respectively indicating that the Index was extremely oversold and due for a rebound (or throw back rally).
Remember, a higher barometer reading indicates there is more investment value in the Index over a lower reading. In addition, there has been a recent increase in short interest for SPY over the past week or so. So, as the Index has recovered and risen in its valuation some investors are now increasing their short positions in the Index over the past couple of weeks. Short interest as measured in the number of days to cover has risen from 1.1 days to cover to 1.8 days.
I'm thinking ... and, this is just a scientific wild ass guess (SWAG) ... we will see the markets pullback some once we get through 4Q2018 earnings and revenue reporting. After all, forward earnings growth projections for the Index have, of late, been on the decline. Also, remember there is a lot of "hot" money that frequently gets reposition in the markets form time-to-time through computerized trading systems. Since stocks have recently had some good upward momentum during January here comes (or came) the fast money. And, how long will it be before the FOMC again begins to bump interest rates? They are still low by historical standards and I'm thinking although they say they are on hold for now their actions might be quite different in a few months, or so. Perhaps, they have raised to far and to quickly and this is the true reason for their pause.
For me, I'm watching the yield on the US10Yr Treasury as a clue of what might be ready to happen with stocks. Today, it closed with a yield of 2.64% which is way down from its October high yield of around 3.23%. Seems, the US10yr is still in good demand. Since, bond values and their yield generally move in opposite direction of one another ... Well ... I'm thinking ... the time to again become a buyer of stocks will be when investors begin to flee bonds and their yield begins to rise. Right now cover seems to still be sought by some investors with their demand for bonds.
So, emerging markets just might be the near term ticket since both domestic stocks and bonds seem to be overbought, from my perspective, and explains why they are catching investor interest. After all, both of my emerging market funds are up nicely thus far this year and their P/E Ratios are quite low compaired to other choices. Plus, they are both off their 52 week highs by better than 10%. Remember, though, the hot money crowd also chases after opportunity.
I hope my thoughts @MikeW have been helpful.
Old_Skeet
Here is a link to the latest Fact Sheet for PZVEX:
https://snl.com/Cache/1001247182.PDF?O=PDF&T=&Y=&D=&FID=1001247182&iid=4162576
I initially bought GQGPX at td Ameritrade last year until it was available Fidelity late 2018. Am adding to it each month.
Numero dos: for investors who own multisector and/or global credit funds, there's likely a chunk of EM debt in those funds to consider in portfolio allocation. Much of the time, EM debt and equity march to the same drummer (the strength of the U.S. $, for example).
Thanks very much for providing your market barometer. I always enjoy getting your market updates as it aids with my planning. I also appreciate the information on increase in short interest. The market has certainly had a nice run here since the day before Christmas. Unfortunately, I lacked the cohones to add to positions when it felt like staring into the abyss. Both the Fed actions and the Chinese adding liquidity have certainly calmed fears and led to the risk on moves. I am thinking that I will select 1-2 EM funds and start building positions as I have very low exposure right now.
thanks for sharing your thoughts on GQGPX and also PRIJX. Morningstar doesn't cover either. Can I ask what draws you to PRIJX? I see that its a top performer over the last 3 years. For GQGPX, I'm assuming Rajiv Jain's track record is the driver. thanks so much.
@AndyJ and @davfor.. thanks for providing your funds too.
10.48% in the Americas. Half of that is in Latin America.
Europe Emerging: ZERO.
Asia Emerging 14.08%
So, it's about 20% EM.
...I'm sticking with it, after grabbing and re-deploying profit.
I do like to own some EM bonds however. Currently own PREMX. I perceive them less risky than EM equities and still offering potential above average long term return. A big reason they’ve spiked recently is in response to the Fed’s 180-degree change in posture and the subsequent pullback in the dollar vs many foreign currencies. As for EM equities, many globally diversified equity funds commit anywhere from 5-25% of their assets to EM equities. (Read Prospectus / Fund Report.) Gets you the EM equity exposure while leaving the harder part (where, when, how much to commit) to the managers.
* Just noticed this fund has been liquidated.
FWIW