We take a look at the emerging market funds that have offered double digit returns since the global equity markets plunged on August 24th.
To say that emerging market equities have had a rough time of it over the past few months would be an understatement.
Concerns over China’s economy slowing down and the effect that is having on other EM economies plus the commodity sector, has been on the forefront of most investors’ minds. Then to top it all off – Chinese stock markets went through the floor on the 24th of August - now aptly dubbed Black Monday. This set off a frenzied sell-off across both developed and developing equity markets.
Patrick Enright, analyst at FE Research, says: “Emerging markets with significant exposure to the Chinese economy naturally suffered as well. China had until recently been unrelenting in its appetite for commodities, so when this demand softened, countries like Brazil were hit hard.
“Imports to the second-largest economy in the world are down 20 per cent in September compared to a year before, reflecting this change. Another pertinent headwind for emerging markets is the trade-weighted strength of the US dollar, increasing the debt burdens for those countries who hold large amounts of dollar-denominated debt.
“Commodity reliant economies have also seen a huge depreciation of their currencies, with the Brazilian real depreciating over 40 per cent against the dollar in 2015.”
The negative sentiment of the last few weeks appears to have cooled somewhat however, Enright underlines, with commodity prices looking to have bottomed out and dollar strength firming, as broad EM inflation forecasts pick up – which means investment funds have had a chance to recoup some of the losses.
Since August 24th, the Investment Association’s Global Emerging Market sector has returned some 6.65 per cent.
The top returning fund has been NFU Mutual’s Global Emerging Markets fund with nearly 12.5 per cent over the past seven weeks. Interestingly, although the fund has returned the most from its sector – it has been consistently underperforming its peers over the past 1, 3 and 5 years, according to data from FE Analytics.
Marlborough’s Emerging Markets fund is in second place, returning 11.11 per cent since Black Monday, with MFS Meridian Emerging Markets Equity fund coming third with 11.09 per cent.
Using data from FE Analytics, we give you the seven EM funds toping the sector since Black Monday.
Pricing Spread: Bid Bid, Price Range: from 23 Aug 2015 to 12 Oct 2015, Currency: Pounds Sterling, Source: FE Trustnet