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How Emerging Markets Are Faring In A Post-China Economy
FYI: Emerging market economies have had a tough go of it lately. China’s market collapse left a void in the commodities space – a space that developing countries rely on for growth. According to the World Bank, emerging market economies have been set back decades as a result. Regards, Ted http://mutualfunds.com/news/2016/06/10/how-emerging-markets-are-faring-in-a-post-china-economy/
There have been "questionable" periods for equities over the markets' histories. Yet, over a long sample, the use of a bi annual switching strategy involving investing in: 1) a blend of Emerging small cap and U.S. Small cap value from Nov 1 to May 1 and 2) the utilities sector / cash * from May 1 to Nov 1, has produced a risk adjusted 380bp CAGR return premium vs. buy & hold Emerging small cap / small cap value blend. The addition of U.S, Large Cap to the blend has also produced returns premium.
CAGRs 1954 - 2016 Blend / Utilities, cash = 20.9% vs. Buy & hold 17.1% 1954 - 1983 18.7% vs. 17.9% 1984 - 2016 22.3% vs. 15.6% 2000 - 2016 17.8% vs. 11.6%
% of 5 year rolling CAGR periods > 100% ( 1954 - 2016 ) = 79% % of 5 year rolling CAGR periods 50% - 100% = 14% no losing 5 year rolling CAGR periods
* Application of a "Risk profile" variable determining forward year's equity market "risk". High Risk profile year = allocate to cash May 1 - Nov 1 High risk years falling in sample: 1956, 1962, 1969, 1974, 1978, 1981, 1982, 1990, 2001, 2002, 2008, 2015, 2016
Comments
CAGRs
1954 - 2016
Blend / Utilities, cash = 20.9% vs. Buy & hold 17.1%
1954 - 1983
18.7% vs. 17.9%
1984 - 2016
22.3% vs. 15.6%
2000 - 2016
17.8% vs. 11.6%
% of 5 year rolling CAGR periods > 100% ( 1954 - 2016 ) = 79%
% of 5 year rolling CAGR periods 50% - 100% = 14%
no losing 5 year rolling CAGR periods
* Application of a "Risk profile" variable determining forward year's equity market "risk". High Risk profile year = allocate to cash May 1 - Nov 1
High risk years falling in sample: 1956, 1962, 1969, 1974, 1978, 1981, 1982, 1990, 2001, 2002, 2008, 2015, 2016