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Seafarer, Wasatch EM Small Cap, Wm Blair EM Small Cap

David_Snowball
edited January 2014 in Fund Discussions
Hi, guys.

In truth, the Blair fund (WESNX) wasn't particularly on my radar screen until you began discussing it in the recent Seafarer (SFGIX) thread. Spent a few minutes looking at the numbers for WESNX, SFGIX and Wasatch EM SC (WAEMX, closed) since that's one of the sector's flagship funds.

The most obvious place to start is the big picture: Seafarer is not trying to trawl the same waters as the other two.

  • Wasatch is 95% invested, 83% small to midcap, MMC 1.8 billion, with a forward P/E of 17.
  • Blair is 98% invested, 75% small to midcap, MMC 2.2 billion, with a forward P/E of 19.
  • Seafarer is 98% invested, 50% micro to midcap, MMC 3.4 billion, with a forward P/E of 14.
  • the average EM fund is more-or-less fully invested, 20% small to midcap, MMC 20 billion, with a forward P/E of 12.
Seafarer simultaneously has more developed market exposure (32% to 25% for the others - firms domiciled in the US and Europe whose earnings are predominantly generated in emerging markets) and more microcap exposure (6% versus zero for the others). Seafarer has a 1.65% yield, while the others are at zero.

The youngest of the three is Seafarer, which launched March 2012. Since the date of Seafarer's launch, $10,000 invested would have grown to:

  • $13,500 Blair
  • $11,800 Seafarer
  • $10,500 Wasatch
  • $10,100 Average EM
Since March 2012, the EM group has lost money in 11 months. Blair had four down months, Seafarer seven and Wasatch eight. In the months when the market has fallen, Blair outperformed the market on nine occasions, Seafarer on eight and Wasatch on five.

In a head-to-head comparison between Wasatch and the others, in down months Seafarer outperformed Wasatch on eight of nine occasions. Blair outperformed Wasatch on seven of eight occasions. (Why eight or nine rather than 11 as the base? Because there are months in which these funds are in the black even when the index has fallen; I've only looked at months when at least one of the three was in the red.)

I'm intrigued by Blair's performance. I'm reassured by Seafarer's and quite surprised by Wasatch's. I'm likely to look more into Blair (largish, but young) and just remain curious about Wasatch's (both too big and too old to fall within our universe).

For what interest it holds,

David

Comments

  • EMinvestor
    Great, thanks for the breakdown, and I look forward to learning more about Blair in the future.
  • rmt
    edited January 2014
    Thanks David. I was looking at starting a new position in GPEOX. Do you think that it's performance may mirror WAESX? I do not know if GP managers have worked in EM SC space.

    image

  • David_Snowball
    Reply to @rmt: I hope I didn't goof your post too badly. The link you embedded didn't resolve into an image, so I replace it. I'm afraid I couldn't figure out how to do the legend for the image, though.

    David
  • MarkM
    M* says Seafarer has zero US, UK and developed European in its portfolio. David, your analysis says differently. Or am I missing some subtlety?
  • rmt
    Reply to @David_Snowball:
    David, If you had clicked on the hyperlink, it would have opened the chart in full with the legend.
    Anyway,here is the order starting from the top: WAFMX,WESNX,SFGIX,MSMLX and WAEMX
  • beebee
    edited January 2014
    Reply to @David_Snowball: Hi David, by capturing chart just slightly higher the legend will display for you. I also try to include (capture) the "date range" just above the fund legend. Hope this is a help. My order may be different than yours.
    image
  • MarkM
    "Seafarer simultaneously has more developed market exposure (32% to 25% for the others - firms domiciled in the US and Europe whose earnings are predominantly generated in emerging markets)......"

    This statement is what I was referring to by the above.
  • David_Snowball
    Reply to @MarkM: Morningstar breaks SFGIX into 68% emerging, 32% developed. It's split between Japan, Singapore, Taiwan and South Korea.

    David
  • David_Snowball
    Reply to @MarkM: My bad. "firms domiciled in developed markets, such as those in the US, Japan and Western Europe whose earnings ...."
  • MarkMark
    Not to muck up your dog and pony show but has anyone considered OBIOX? Just a thought.
  • MarkM
    So no Europe and no US but in Japan, Singapore, Taiwan and So. Korea. Much different.

    My point in all this was for people to investigate the REASON for the performance differences among funds. And hopefully to do much of the work themselves. Where a fund has exposure and to what drives performance. And it also has implications for asset allocation decisions.
  • MarkM
    Reply to @Mark: The thread in this "dog and pony show" (derisive term usually referring to sales and marketing pitches) is about emerging markets funds. That is a foreign small/ mid cap fund with EM exposure in the teens.
  • finder
    One way to analyze WESNX is to look at its older brother WBEIX. I invested in it some time ago until it lost 2/3 of its value from its peak in the end of 2007 to the minimum at the beginning of 2009. It was a harsh educational experience. WAEMX has fallen exactly the same way, but then rapidly recovered.
  • kutuzov
    If you are comparing WESNX, SFGIX, and WAEMX, you ought to also be looking at RIMIX and CEFZX. These are all EM smallcap funds, launched roughly around the same time (the Wasatch fund is older, and now we have GPEOX launching). Seafarer is trawling exactly the same waters as these other funds, with perhaps small stylistic differences but basically living in the same higher-quality SMID EM world. The key difference, as you surmise, is to look closely at the stock selection process for each fund. Quantitatively, you can look at beta, downside capture, sortino, etc, but these are all such young funds you won't learn much. Turnover rate is a pretty good early indicator of differences in process. The best way to gauge the difference is to look at their holdings and written communications about them.
  • mrdarceymrdarcey
    Reply to @MarkM: I would be careful using M*'s portfolio breakdowns. They list ARTGX, for instance, as having 44.3% U.S. and 43.8% foreign equities, with 11.8% cash (as of 9/30). Artisan lists the numbers as 48.8% U.S. and 39% foreign equities, with 12.3% cash (as of 12/31). What's even more bizarre is that ARTGX has been slowly increasing its foreign stake over the past few months, so the M* numbers were never close to correct.

    The M* numbers on SFGIX are close, but I always check the fund site to be sure now.
  • MarkM
    Reply to @mrdarcey: Of course you are correct to point this out. Mine was just for quick fact checking and the discrepancy being pointed out was not a matter of small degree, thereby bringing conclusions from analysis directly into question.

    It's much preferable to use primary sources as you point out, and it only reinforces my point that investors need to do their OWN research instead of relying on others to do the lifting for them.

    Best,
  • mrdarceymrdarcey
    Reply to @MarkM: Agree 100%. It's just annoying that M* is so pervasive. Fido, for instance, uses their portfolio breakdowns. What are people paying for if they can't get basic info right from a company that provides updates to its portfolios every month?

    Caveat emptor.
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