Investment trust swaps: Emerging markets
Anyone rueing the soft-closure of Aberdeen Emerging Markets should look at its counterparts in the relevant IT sector, where two of the three oldest trusts have outperformed the high-profile fund over 10 years.
By Joshua Ausden, News Editor, FE Trustnet
Thursday August 23, 2012
IMA Global Emerging Markets has been one of the best-performing sectors in recent years, but those who want access to it are likely to find it more and more difficult to get exposure to the best managers.
With the First State Global Emerging Markets
fund already soft-closed, and the First State Global Emerging Market Leaders
, Aberdeen Emerging Markets
and Aberdeen Global Emerging Market Equity
funds on the verge of following suit, there are very few established options still open to new investment.
There are, however, plenty of proven managers in the investment trust universe. The three trusts with the longest track records – Templeton Emerging Markets
, Genesis Emerging Market
and JP Morgan Emerging Markets IT
– have all outperformed the MSCI Emerging Markets index by a considerable margin over 10 years.
Templeton Emerging Markets and Genesis Emerging Market, which have returned 502.95 and 555.14 per cent respectively over the period, have returned more than any open-ended emerging market portfolio, and JP Morgan Emerging Markets falls short of only Aberdeen Emerging Markets.
Performance of trusts and index
Source: FE Analytics
All three portfolios have also beaten the index over three years, although Genesis Emerging Market falls slightly short over five.
JP Morgan Emerging Markets IT, which has been headed up by Austin Forey since 1994, is the least volatile of the three, but there is very little in it.
Genesis Emerging Market lost the most during the 2008 downturn, but protected much better against the 2011 slump. Andrew Elder has managed the portfolio since January 2004.
Performance of trusts vs index over 10-yrs
Source: FE Analytics
The largest and highest profile of all the emerging market trusts is the £1.9bn Templeton Emerging Markets, headed up by Dr Mark Mobius. It is currently trading on a discount to NAV of 8.1 per cent.
With a total expense ratio (TER) of 1.15 per cent, the JPM portfolio is the cheapest of the three. Genesis and Templeton have a TER of 1.8 per cent and 1.31 per cent respectively. It should be noted, however, that all three charge performance fees.
Forey’s trust is also currently trading on the biggest discount – 10.7 per cent according to the AIC – while Genesis Emerging Market is on the smallest [4.28 per cent].