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Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.

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Choosing the Right Asset Class in Emerging Markets: Why it Matters

http://www.pimco.com/EN/Insights/Pages/Choosing-the-Right-Asset-Class-in-Emerging-Markets-Why-it-Matters.aspx

- Depending on individual risk tolerances during the past five years, it may have made more sense to overweight one or two EM asset classes and at times to avoid one or two EM asset classes altogether.

- In general, asset classes are better viewed as carriers of risks rather than each being considered a risk in its own right. This phenomenon is readily apparent in the emerging market space.

- We have advocated that asset allocation in EM should be dynamic with respect to both segment and country. This is an important consideration of the EM investment process.

Comments

  • We have observed that really good managers/shops can and have done much better than EM index funds. Yeah, the index funds will almost always have lower expenses. But ODMAX, for example, even with a manager change a few years ago, continues to out-perform the EM index, 8 of 10 years, as well as 1, 3, 5-year periods. In the case of EM stocks, being tied to the index is not necessarily a good thing. And inefficiency is even more apparent in EM small caps, where WAEMX is way ahead of the EM index. This is not to say that there are not some real stinkers among the actively-managed EM funds. Pioneer, DWS, Putnam, and many others have managed to put a new meaning to the word ugly.
  • Reply to @BobC: Can you recommend no-load EM equity funds since many of contributors to this board are DIY type?
  • ODMAX is available at NAV on a number of platforms. If it is not available on yours, I would suggest Invesco GTDYX, Lazard LZOEX. And Wasatch WAEMX should be available without commission wherever it is traded. Hope this helps.
  • Bob- I'd forgotten about WAEMX until you mentioned it above. Going to open a small position via Schwab. I like the way it tracks vs the S&P. If you think that I'm going nuts here, not to worry- now have small positions in MAPIX and GASFX, will add WAEMX and most likely MFLDX. Total of all of those now only about 1 or 2% of portfolio, but may very well increase a bit as we see what happens "over there". Thanks again.
  • Regarding WAEMX, if I'm not mistaken it is currently closed to new investors. Wasatch does a good job of closing funds when assets rise above what they consider to be managable levels with respect to doing right by their shareholders.
  • Nuts. Didn't pick up on that one. Thanks- will keep looking for something similar. Suggestions appreciated!
  • edited June 2012
    Hi OJ,
    Fido's newer entry into the EM smaller cap area (FEDDX) is in the top 20 YTD of about 150 similar funds. Check the link for this and others that may be related. Note: not everything in the Bloomberg category sections are similar funds.

    Bloomberg EM equity

    May check these, too. Fido's EM small cap FEDDX and their EM balanced of equity and bonds FTEMX, with the bonds area being managed from the same manager and group who has a fine record with FNMIX.
    Both funds are newbies.
    E.R's are high, as are most in this area. FEDDX also has a 2% redemption fee if held less than 90 days, and FTEMX a 1.5% fee for less than 90 days.

    Last note.........EM bonds have held better than I would have expected in light of the strenght of the $.

    Take care,
    Catch
  • Hi Catch- thanks for the info... beginning undue diligence...
  • This is not a recommendation because this is a new animal. But since there was a question whether there is something similar to WAEMX, sure there is one, WAFMX. Study it well before investing though because it invests in small companies in frontier markets.
  • Reply to @andrei: Thanks much. Will do.
  • edited June 2012
    Reply to @Sven: You can get the Oppenheimer Developing markets fund without load. I can get the Y shares, ODVYX through T.Rowe Price.
  • Reply to @MikeM: It is not available through the T.Rowe Price's retail channel. Was it available through your 401(K) or 403(b)?
  • Reply to @BobC: Both Lazard and Wasatch offerings are closed to new investors. I will check out the other options you mentioned.

    By the way other than performance metric versus the respective index that you are looking, what other criteria when you screen actively managed EM funds?
  • edited June 2012
    Reply to @Sven: This is my 401k, but I don't believe that matters. My 401k is through TRP and gives me the option of using something called "TradeLink". TradeLink gives me the option to purchase any of the 1000's of funds TRP carries.

    I don't know if this would be true for you, but what I found about TRP is their 'available fund search' is poor. Through TRP, I use a search option called Gateway that supposedly gives the fund options available. What I found is this Gateway search does not always give all the funds available. I've asked TRP about that in the past and they acknowledged the problem and said if you don't see a fund you are looking for, call their help line to find out for sure.

    What I do when I see a fund I want to investigate in TRP; I go to M* and start to type in the name in the 'quote' box. For instance if you type Oppenheimer Developing Markets, it will show you all the share types available, ODMAX, ODVYX, ODVNX, ect... as you type. I'll then go into my TRP account and start a purchase request with the fund names. One of them will generally move forward and show it is available in TRP for purchase - even though it did not show up in their search engine. I have purchased ODVYX even though I did not find it in their Gateway search engine - transfer fee free by the way.

    Don't know if that helps you any Sven, but bottom line is I don't trust the TRP search.
  • Reply to @MikeM: Thanks Mike. I will give it another try...

    For such a fine mutual fund house, one would expect they spend decent $$ to keep up with the competition. In the meantime, Schwab and Fidelity are making their web service truly user-friendly.
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