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M*: How To Participate In The Emerging-Markets Rally
This is a little late to the party, since EM stocks are up about 17% YTD. The way to participate is to have a diversified mix that has an allocation to EM stocks. If you can't stomach the higher volatility, own something like SFGIX or NWFFX that is geared for lower risk. Or don't own any at all, but don't be lured into buying after a big run-up.
Oh, of course. It is that time of the month again. They have to mention American funds.
Personally I've been looking at FTEMX for years, but somehow never pulled the trigger. I got back into SFGIX after they announced closing but hardly have anything. I'm going to keep patient. If I lose, I lose.
"Vanguard Emerging Markets Stock Index's low costs overcome concerns about country weightings," writes Oey in her latest analyst report.
I'm not sure I follow that line of reasoning. Is she saying that, if the cost of an index (or, for that matter, any MF) is low enough, you need not be concerned by a portfolio's very overweighted/skewed allocation? Because the low cost "overcomes" any concerns one might have? How does that work?
To Bob's point, this has always felt more like a relief rally to me, not one based on improving fundamentals. If that is the case, why in the world would Elmer Fudd want to chase after this rabbit (in hopes that dweams really do come twue)? For a long-term hold, I'm gonna wait for a better entry.
"Vanguard Emerging Markets Stock Index's low costs overcome concerns about country weightings," writes Oey in her latest analyst report.
I'm not sure I follow that line of reasoning. Is she saying that, if the cost of an index (or, for that matter, any MF) is low enough, you need not be concerned by a portfolio's very overweighted/skewed allocation? Because the low cost "overcomes" any concerns one might have? How does that work?
I don't follow it either, and here's an example of how that reasoning might "work" in practice, in dollars and cents, comparing, for the sake of argument, VEIEX to BEXFX over the past five full calendar years.
VEIEX's E.R. is lower by 1.12% a year, but it trailed BEXFX in total return (including E.R., of course) by 4.31% in 2015, 3.05% in 2014, 19.9% in 2013, 4.34% in 2012, and 1.58% in 2011 -- so not a single year represented when its lower E.R. made a difference in relative performance. (Data from M* performance pages.)
@hezzsafe, Concur with your statement. In this asset class active management makes more sense with Seafarer and Matthews Asian funds. Mr. Foster's fund in particular has been doing well since inception.
I was happy to grab a quick 30% profit from PRLAX in under 90 days early in the year. Guess I sold too early. It's now up 48% YTD.
However, somebody taught me that a bird in the hand is better than two in the bush. ---
PS: I still retain a slim exposure to EM bonds - very slim. For a younger investor I think there's some long term growth potential there with substantially lower risk than EM stocks would entail.
According to the latest SPIVA US Mid-Year report, over the past 10 years (includes 2008 downdraft) 81.94% and 81.82% of actively managed EM equity and EM bond funds, respectively, were outperformed by their benchmark indices.
Also, as I see it, many of the actively managed EM equity funds that have outperformed the indices, tend to have done so over relatively short time periods (BEXFX - since 2010, SIGIX - since 2012), and have a significantly different average market cap (SIGIX) and EM stock exposure (SIGIX) than the comparison benchmark.
Global Bonds: PRSNX: (5 years) +4.94%. Too young for a 10-year number. By the way, MAINX will be 5 years old, soon. I no longer own it. But it looks good.
Comments
Personally I've been looking at FTEMX for years, but somehow never pulled the trigger. I got back into SFGIX after they announced closing but hardly have anything. I'm going to keep patient. If I lose, I lose.
To Bob's point, this has always felt more like a relief rally to me, not one based on improving fundamentals. If that is the case, why in the world would Elmer Fudd want to chase after this rabbit (in hopes that dweams really do come twue)? For a long-term hold, I'm gonna wait for a better entry.
VEIEX's E.R. is lower by 1.12% a year, but it trailed BEXFX in total return (including E.R., of course) by 4.31% in 2015, 3.05% in 2014, 19.9% in 2013, 4.34% in 2012, and 1.58% in 2011 -- so not a single year represented when its lower E.R. made a difference in relative performance. (Data from M* performance pages.)
However, somebody taught me that a bird in the hand is better than two in the bush.
---
PS: I still retain a slim exposure to EM bonds - very slim. For a younger investor I think there's some long term growth potential there with substantially lower risk than EM stocks would entail.
Also, as I see it, many of the actively managed EM equity funds that have outperformed the indices, tend to have done so over relatively short time periods (BEXFX - since 2010, SIGIX - since 2012), and have a significantly different average market cap (SIGIX) and EM stock exposure (SIGIX) than the comparison benchmark.
SPIVA
Kevin
FNMIX...... 10 year performance: +7.85%
PREMX: +6.87%.
Small-cap Value: TRP (PRSVX:) +6.92%
PRDGX (TRP LC Div. Growth:) +7.3%
Balanced: PRWCX: +8.16%
MAPOX: +6.81%
Global Bonds: PRSNX: (5 years) +4.94%. Too young for a 10-year number. By the way, MAINX will be 5 years old, soon. I no longer own it. But it looks good.