FYI: Worries about trade wars and decelerating global growth in 2018 left their imprint on developing economies and the funds that invest in them. Between Jan. 29 and Oct. 29, the MSCI Emerging Markets Index lost a fourth of its value, peak to trough. Popular Chinese stocks like Tencent and Alibaba (BABA) helped lead the race to bottom. While the months of November and December brought somewhat of a reprieve, the typical diversified emerging-markets Morningstar Category fund shed 16.1% in 2018. Investors who had the temerity to increase their exposure to emerging markets during the last bear market ended on Jan. 21, 2016, reaped a handsome reward as the MSCI Emerging Markets Index almost doubled prior to its 2018 downturn. Here are a few ideas for betting on another rebound.
Regards,
Ted
https://www.morningstar.com/articles/913835/time-to-buy-emerging-markets.html
Comments
I'm wondering what others might think is a reasonable percent of their portfolio that should be held in emerging markets? Any thoughts?
I have linked below a Forbe's article on the subject. It is titled "Should Long Term Investors Own More Emerging Market Equities?"
https://www.forbes.com/sites/advisor/2018/08/01/should-long-term-investors-own-more-emerging-market-equities/#31769cfc54ee
Derf
P.S. Thanks O_S for the link.
What's so great about NEWFX and DWGAX? I don't get everybody's infatuation with American Funds......
Now, do you have any suggestions for other EM funds or are you just calling out the American ones?
I don't because I haven't explored the category in some time and I'm not likely to any time soon.
American Funds is an asset gatherer. I'd never invest with them.
Like JoJo said, EMs are very volatile - more so on the equity side. So my first question is Who needs the pain?. International / global equity funds can and do hold EM and can be pretty volatile themselves. So why ramp it up further if you don’t need to? Many international funds fell 50% from late ‘07 until early ‘09. I don’t even want to look how EM fared. But couldn’t have been any better.
My second question is which “emerging market”? They‘re literally all over the planet. Do you mean The Middle East - a region where you can walk into an Embassy and be carried out in a suitcase? Brazil - where the new guy is lowering the hammer on the gay transgender community and otherwise usurping individual freedoms? Africa? China? North or South Korea? Russia?
So it seems to me an intelligent conversation about whether or not to own EM might begin with what part of the world and why. Often some areas prosper while others falter. Back in my early investing days EM was pretty synonymous with raw materials / natural resources, So there was often an indirect play there. That’s still the case with some, like Venezuela, but it’s becoming more the exception today as manufacturing has taken hold in many EM regions that may lack natural resources. I do like international stock and bond funds because they provides a counterweight to the U.S. dollar should it falter. But I’m not so sure you have to play in EM to gain that advantage.
PRIDX gives me almost all of my international & EM exposure.
X-Ray says:
full portf. carries Asia EM 2.47 of total.
...And what about "Australasia?" Is that Oz plus NZ plus out of the way places like The Maldives and the Solomons and the Marshall Islands, or what? (0.62% there.)
Africa/M.E =0.19%
Europe EM = 0.
LatAm =0.89%.
Ethical filters as well as portf. protection will keep me much more Stateside, from now on, though I still want just one finger in the EM pie.
...Although, judging from the ones in the seats of power these days, "ethics" is a thing they are unaware of. But what are ya gonna do. Untrammeled capitalism is the only game in town. Until Leadership grows or re-grows a conscience. ("Can you say, 'con-science,' boys and girls? I KNEW you COULD," said Mr. Rogers, in his trademark creepy voice, from the grave.)
BONDS are in PTIAX and the lion's share is in PRSNX. ALL bonds in portf. these days = 59% of total.
Emerging Markets Intrnt & Ecmrc ETF EMQQ.
Africa has a population of 1.2 billion, with median age 18.
Europe has pop of 740 million, with median age 42.
Where would you invest?
From Xray, within equities, I'm currently 1.27% Latin America, 0.42% Europe Emerging, 0.49% Africa/Middle East, and 3.18% Asia Emerging which brings my emerging market exposure to 5.36%. With this, I've got room for some more emerging market exposure before reaching my seven percent threshold. I'm also considering adding to my commodity strategy fund as many emerging market economies are also major commodity producers.