While there is much value to be added in lesser-known emerging markets, some investors may prefer the broader exposure to the sector, which can offer them high growth but without the high active management fees that often come alongside these specialised products.
Asia in particular is a good area for investors to seek broad exposure to, and can be supplemented with a single-country or -sector fund that can grab growth in the areas surging ahead.
With this in mind, FE Trustnet looks at three passive vehicles that offer access to the Asian boom.
Vanguard Pacific ex Japan Stock Index
With ongoing charges of just 0.3 per cent, the Vanguard Pacific ex Japan Stock index fund is significantly cheaper than the leading Asia Pacific funds, whose charges often range from as little at 1.2 per cent to as much as 2.5 per cent.
The $938m fund tracked the MSCI Pacific ex Japan index with an error of 8.12 per cent over the last three years.
Over the same period, it is one of the best-performing funds in the IMA Asia Pacific ex Japan sector and since launch it has made 85.37 per cent.
The sector and index have gained 65.27 per cent and 86.63 per cent over this time, respectively.
Performance of fund vs sector and index since launch
Source: FE Analytics
The Dublin-domiciled tracker is yielding 3.33 per cent.
The majority of the passive fund is invested in financials, at 52.9 per cent, and among its top holdings are Australian banks Westpac, the Commonwealth Bank of Australia, and the National Australia Bank.
The fund also lists multinational mining giants BHP Billiton and Rio Tinto among its top bets, in line with the index.
A total of 64.1 per cent of the portfolio is invested in Australasia, with nearly 35 per cent in the Pacific Basin.
Vanguard funds are available directly for a minimum investment of £100,000; however, retail investors can access them via platforms for a much lower entry amount.
BlackRock CIF Pacific ex Japan Equity Tracker
The four crown-rated BlackRock CIF Pacific ex Japan Equity Tracker has even lower ongoing charges than the Vanguard fund, at 0.27 per cent.
The £631.2m portfolio has replicated the performance of the FTSE World Asia Pacific ex Japan index with an error of just 4.04 per cent over three years.
It has consistently beaten the IMA Asia Pacific ex Japan index over one, three and five years, and performed broadly in line with the index over that period.
Over three years, the tracker has gained 42.05 per cent while the sector and index picked up just 34.58 per cent and 35.69 per cent, according to FE Analytics.
Performance of fund vs sector and index over 3yrs
Source: FE Analytics
It has a yield of 2.51 per cent.
South Korean technology behemoth Samsung Electronics, which is a staple in many emerging markets and Asia Pacific funds, is the number-one holding in the BlackRock tracker.
Other major firms in the region such as the Commonwealth Bank of Australia, Taiwan Semiconductor Manufacturing and BHP Billiton are in the top-10.
The fund is available via platforms.
HSBC Pacific Index
Tracking the FTSE World Asia Pacific ex Japan index, the HSBC Pacific Index fund gives investors broad access to the region, backing major Asia and Pacific companies such as Samsung Electronics, Commonwealth Bank of Australia, Westpac, National Australia Bank and miner BHP Billiton.
It is yielding 2.46 per cent, according to FE Analytics.
The fund tracked the index with an error of just 3.69 per cent – the lowest on this list – over three years.
Over the last 10 years, the HSBC tracker has lagged both the sector and index, returning 231.35 per cent while the sector and index gained 273.95 per cent and 311.81 per cent, respectively.
Performance of fund vs sector and index over 10yrs
Source: FE Analytics
Unlike the other two portfolios, the tracker is tipped towards telecommunications, media and technology stocks, with 20 per cent in the sector.
It is equally split between consumer products, financials, healthcare, oil and gas services and utilities stocks – at 10 per cent each.
The fund requires a minimum investment of £1,000 and has ongoing charges of 0.41 per cent.
