Three EM funds that have stood the test of time
Money Management used FE Analytics to scope out the emerging markets sector and found three funds that have stood the test of time.
The Legg Mason Martin Currie Emerging Markets fund, the MFS Emerging Markets Equity Trust fund and the BlackRock iShares MSCI BRIC ETF fund have all produced top-quartile returns across the five years, three years and year to 31 August 2018.
Legg Mason’s five FE Crown-rated Martin Currie fund returned 10.95 per cent, 15.91 per cent and 11.18 per cent for those respective periods and has a FE Risk Score of 144 (where the MSCI Emerging Markets index has a Risk Score of 100).
It outperformed its benchmark, the MSCI Emerging Markets index, which returned 9.90 per cent, 11.09 per cent and 9.32 per cent for the five years, three years and one-year to 31 August 2018, across all timeframes.
Among its top holdings are Samsung Electronics (7.62 per cent), Taiwan Semiconductor Manufacturing (7.13 per cent), Alibaba Group (6.90 per cent), Tencent (6.58 per cent) and Naspers (4.63 per cent), with 44.75 per cent of the portfolio invested in Asia, followed by 22.99 per cent in North America, 15.79 per cent in the Pacific Basin, and seven per cent in the Middle East and Africa.
The five FE Crown-rated MFS Emerging Markets fund has a slightly lower risk score of 123, and returned 9.82 per cent, 13.24 per cent and 14.1 per cent for the five years, three years and one year to 31 August 2018, only falling short of the MSCI EM index by 0.08 per cent over five years.
Sixty per cent of the portfolio lies in the Pacific Basin, with Alibaba as its top holding (5.18 per cent) followed by Taiwan Semiconductor Manufacturing (5.05 per cent), Samsung (4.45 per cent), Tencent (3.26 per cent) and Baidu (3.22 per cent).
BlackRock’s iShares MSCI BRIC ETF was also a consistent top-quartile name with returns of 10.6 per cent, 12.1 per cent and 10.09 per cent for the five years, three years and one year to 31 August.
The fund’s objective is to track the investment results of the MSCI BRIC index, which is composed of Brazilian, Russian, Indian and Chinese equities.
The chart below shows the performance of the EM funds as compared to the ACS Equity – Emerging markets sector and MSCI Emerging Markets index for the five years to 31 August 2018.
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