RWC Global Emerging Markets, Hermes Global Emerging Markets
Emerging market equities have come back into
Since the start of 2016, however, emerging markets have rebounded strongly on the back of relatively low valuations, improving economic fundamentals and renewed investor sentiment. Since 1 January 2016, the MSCI Emerging Markets index has risen 59.58 per cent while the MSCI World is up 38.26 per cent.
In the following article, Architas investment director Adrian Lowcock highlights three emerging markets funds that investors bullish on the asset class could consider.
RWC Global Emerging Markets
First up is the RWC Global Emerging Markets fund. Manager John Malloy focuses on attractive growth companies but can be seen an opportunistic investor as he is willing to buy into stocks when they are out of
Since it launched in 2016, the RWC Global Emerging Markets fund has beaten its benchmark and peer group with
Performance of fund vs benchmark and sector since launch
Source: FE Analytics
The £673.4m fund aims to provide long term capital appreciation by investing in emerging market equities and to a limited extent, in frontier markets. The portfolio is currently overweight industrials, materials
Lowcock said: “The fund is index agnostic in that they decide whether to hold a position, not whether to be under or overweight it. Manager John Malloy is opportunistic in style although there is also a GARP element in that they don’t want to overpay for growth and are mindful of valuations. The style tends to work best in the early years of a recovery or rebound as markets are often driven by momentum.”
RWC Global Emerging Markets has an ongoing charges figure (OCF) of 1.30 per cent.
Hermes Global Emerging Markets
FE Alpha Manager Gary Greenberg runs the Hermes Global Emerging Markets fund along with deputy manager Kunjal Gala. The largest of Lowcock’s three picks, the fund has assets under management of £3bn.
Lowcock explained the fund manager’s investment approach: “The manager aims to form a portfolio that provides exposure to the asset class with a growth at a reasonable price style.
“Greenberg builds a portfolio from a top-down perspective but takes a cautious approach looking to ensure there is a margin of safety with each invest so the manager has a focus on valuations.”
Hermes Global Emerging Markets counts Tencent, Samsung Electronics, Alibaba and Taiwan Semiconductor Manufacturing as its top holdings and allocates almost 80 per cent of its portfolio in the information technology, financials
Performance of fund vs benchmark and sector over 5yrs
Source: FE Analytics
The fund has made top-decile returns over the past one, three and five years. It is the sector’s highest return over five years after posting a 79.65 per cent total return to 25 April, beating its average IA Global Emerging Markets peer and MSCI Emerging Markets by a significant margin in the process.
Hermes Global Emerging Markets is a five FE Crown-rated fund and has an OCF of 1.13 per cent.
JPM Emerging Markets
The £1.1bn JPM Emerging Markets fund has been managed by Austin Forey since 1997 with Leon Eidelman joining him as co-manager in 2013. Lowcock said it is a less adventurous choice that the previous two picks but could still be attractive
Over the past three years, the four FE Crown-rated fund has returned 44.22 per cent, putting it in the top quartile of the peer group. It is also outperforming the sector and the MSCI Emerging Markets index over five and 10 years.
Performance of fund vs benchmark and sector over 3yrs
Source: FE Analytics
“A focus on quality companies means the fund has provided some resilience in falling markets, as
“The primary focus of the managers is company analysis and this is an area they have added value in. The team also benefit from the resources of JP Morgan and have access to excellent analysts.”
Nearly two-thirds of the fund is invested in financials and information technology with 15
JPM Emerging Markets has a 1.15