Evolving Emerging Market Strategies - A Tactical or Core Component of Asset Allocation? I agree with tgeno. We use EM funds for most client accounts, except for only the very conservative ones. How one employs them can be varied, but for the most part, established funds like ODMAX offer "relatively" good risk/return. We also like Wasatch WAEMX for more diversification. We have used a few regional funds, too, but these can have some volatility that many individual investors find unacceptable. At some point, I would expect EM volatility to be lower than it has been over the last 10 years, but that seems to go with the territory. Keep in mind that Korea, Taiwan, and some others were considered EM at one point. Even though they are the mainstays in most EM funds, their economies are clearly NOT emerging market status. We may say the same for Brazil, China, and Russia in the next decade.
Need advice re diversified EM fund Reply to
@fundalarm: I agree that's a good choice, but on the point about etf's not working when there's stress in the market, I have to toss in another data point. In '08: DEM -34.58%;
ODMAX -48.03%. DEM's lesser loss in '08 had a good bit to do with its 5-year-ish return advantage over
ODMAX.
It depends on the etf; they come in a lot of different flavors.
Need advice re diversified EM fund thanks again -- all. just like with any illiquid market, i am looking for an actively managed fund, not an ETF. ETFs are great -- until there is stress in the market. i'll try to exlore getting odmax on the cheap -- the fund seems to fit the bill nicely. waemx has been closed for several months, but i am one of those who doesn't strive in extreme volatility and thus small cap EM stocks are not an asset class of my choice. thanks for all of your contributions, and keep them coming!
Need advice re diversified EM fund Just another view here: many of the indexes used by etf's are custom-built and fundamentally weighted, which research by Arnott & Co. among others has shown to earn a premium over traditional cap-weighted indexes. The best EM etf's combine fundamental approaches with low costs, imho, into attractive and competitive packages. For just one example (which of course doesn't prove much of anything, but may be of interest): since the inception of DEM in late 2007, $10k invested there vs. $10k in ODMAX has grown to $14,560 for DEM vs. $12,830 for ODMAX (source: Morningstar chart function).
FWIW, AJ
Need advice re diversified EM fund We use ODMAX (available at NAV in some places) as our main diversified EM fund. I am not willing to entrust dollars to an index, since most of them have very little in some of the fastest-growing and most important economies. And I do believe that there are more than enough inefficiencies in the EM area that good managers can do better than the index. ODMAX is evidence of that. We also use MAPIX as a lower-risk way to gain exposure to some Asian markets, but the fund owns 35-40% in developed markets of Japan, Australia, etc. LZOEX has been an ok option in this area and is worth a look. I do like, and own, WAEMX, but it will carry too much risk for some folks. But the fund managers are great stock pickers and they have virtually all of their own dollars tied up in the funds they manage, a good sign. Personally I prefer to let the managers go with their best ideas and not be constrained by any index weightings. Fidelity has had pretty weak international stock funds given its ability in other areas, so I would not look there until something big changes.
Thoughts on these two Oppenheimer funds??? First of all, both funds are pretty good. They have top-notch 3 and 5-year records compared to their peers. But, yes, they do carry some risk. Since you did not indicate how much of your IRA these two holdings are, let's assume they are your total allocation to international stocks. Should you continue to hold them? ODMAX, yes for sure, since it is one of the top EM funds. Personally I do not try to fill in the style boxes when it comes to international stocks. I would rather find 2-3 really good managers a let them run with it. So you might consider something like HIINX that has been among the best for years, even with a significant manager change in the last couple of years. And PSILX has been a darned good option for those looking to own stocks from the entire international array. We use IVVYX, SGOVX, but you may not be able to access them without commissions. If so, Harbor and Price are very worthy substitutes. They would certainly be more conservative than the two Oppenheimer holdings. But I would not sell out of ODMAX. It's a keeper.
Thoughts on these two Oppenheimer funds??? Owned these two funds for years in a traditional IRA. Thinking about taking all/some out and looking for other opportunities. Too much in those two funds and need more diversification. Maybe more conservative?? Oppenheimer DEV Markets FD CLASS A ODMAX and Oppenheimer INTL Small Company CL A OSMAX
These were purchased years ago as B shares that converted to A within a Simple IRA. Are these worth keeping? Wish I had the "No Alarm" fund list...
Pairing Funds: CAMAX = Cambiar Aggressive Value Investor and FVALX = Forester Value Yes, we use that concept a lot, but not necessarily in the same asset class. We like FVALX for its low volatility, but some clients will find it too timid during bull markets. So we will pair it with more aggressive WMGYX, WSCYX, DEFIX, even RBCGX. On the other hand, for more conservative investors, Forrester paired with TIBIX, OAKBX, or FPACX would be an ok combination.
The same holds true for international. Using MAPIX in conjunction with more aggressive ODMAX, WAEMX, IVVYX, or TGVIX works pretty well, too. We believe MAPIX to be a "chicken" way to invest in China, since many of the comapanies in the portfolio do business there, even though they are not Chinese companies.
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