First State Global Emerging Markets Sustainability leads the pack over the last three years and is also third since the tapering sell-off began on 22 May.
Five crown-rated Fidelity Emerging Markets has performed the best over that latter period and is also among the best performers over three years, according to our data.
However, the performance tables make sorry reading: over three years only nine funds out of 61 have made a positive return for investors.
Three of the top four funds are from First State: First State Global Emerging Markets Sustainability has returned 14.59 per cent and First State Global Emerging Markets Leaders 9.95 per cent, with First State Global Emerging Markets making 9.62 per cent.
Performance of funds vs sector and index over 3yrs
Source: FE Analytics
The cuckoo in the nest is Somerset Emerging Markets Dividend Growth, which has returned 9.96 per cent. Manager Edward Lam gained FE Alpha Manager status in the latest rebalancing following this strong performance.
The dividend focus has clearly helped the fund to cushion share price falls, while Lam has been willing to push up his cash weighting to 15 per cent at times to reduce risk.
Earlier this week, FE Trustnet highlighted Lam as one of five star managers sitting on high levels of cash: the current level is 16.5 per cent. Lam also went heavily into the money market in late 2011 and 2012, too.
First State’s Angus Tulloch was also highlighted as one manager employing high levels of cash to preserve wealth. His colleagues have put cash weightings up in the high single digits on the Leaders and Sustainability funds in recent years, although not to the same extent as Lam.
Charlemagne Magna Emerging Markets Dividend has made 8.64 per cent over three years, another fund benefiting from the defensive properties of income.
Premier’s David Hambidge told FE Trustnet this week he was using the fund to dip his toes back into emerging markets on his funds of funds.
Somerset Emerging Markets Small Cap, Aberdeen Global Emerging Markets Smaller Companies and Polar Capital Emerging Markets Income are the only three other funds to have generated positive returns over this timeframe, according to FE data.
Source: FE Analytics
While the First State funds have been almost as successful in relative terms during the more immediate period of crisis, the fate of Aberdeen’s funds is very different.
Aberdeen Global Emerging Markets Smaller Companies has been the worst-hit by the downturn, losing 26.09 per cent. Second-worst was Aberdeen Global Emerging Markets, losing 24.28 per cent.
Performance of funds vs sector and index since 22 May
Source: FE Analytics
High exposure to countries with weakening currencies has hurt Aberdeen’s portfolios. The funds are overweight Brazil, and lead manager Devan Kaloo explains that they retain their confidence in that country despite the negativity surrounding it.
Last year he spoke to FE Trustnet in detail about the factors hindering his funds.
The top-performing portfolio over this period has been the £480m Fidelity Emerging Markets fund, run by FE Alpha Manager Nick Price.
However, this is not too much of an accolade, given that it has lost 11.32 per cent. Standard Life Global Emerging Markets has lost 11.62 per cent while First State Global Emerging Markets Sustainability has lost 12.14 per cent.
Source: FE Analytics
The Fidelity fund is a relatively new entrant to the sector, having been launched in June 2010. It has been a terrible time to be in emerging markets, but the fund has coped well, returning 9.02 per cent as the sector has lost 5.12 per cent. This is the eighth best return over that period.
Performance of fund vs sector and index since launch
Source: FE Analytics
Price’s fund has 36.4 per cent in consumer products, 24.4 per cent in tech and telecoms and 18.1 per cent in financials. It is tilted towards Asia.
The £120m Standard Life fund is even newer, having been launched in May 2012. Alistair Way’s portfolio has a similar sector and geographical tilt.
It is also top-quartile over its short life, having returned 11.66 per cent while the average emerging markets fund has lost 0.15 per cent.
Baillie Gifford Emerging Markets Growth and Hermes Global Emerging Markets have also done a good job in limiting investors’ losses, while Polar Capital Emerging Markets Income is bottom quartile, having produced top-quartile returns over three years in total.
The Somerset Emerging Markets Dividend Growth fund is in the second quartile with losses of 16.96 per cent, a fraction ahead of the Charlemagne fund, down 17.39 per cent.
