Investment Week looks at the top ten funds in the IA Global Emerging Markets sector which have beaten the index over the last five years while maintaining less than a 30% exposure to China.
1. Nomura American Century Emerging Markets Equity 9.2% China weighting, 99.4% five-year total return
Managed by Patricia Ribeiro (pictured) and Sherwin Soo since 2013 and 2016 respectively, this $364.6m Ireland-domiciled fund seeks to invest in companies that are early in their growth cycle. It will identify these firstly with quant-based screening, which typically leads to a universe of 280-300 companies, then fundamental analysis, resulting in a portfolio of between 80 and 110 holdings.
2. JPM Emerging Markets Small Cap22% China weighting, 89.9% five-year total return
As its name suggests, this $2.1bn Luxembourg-domiciled SICAV seeks investments further down the cap spectrum, typically focusing on companies with market caps of between $1bn to $10bn. The fund was launched in 2007 by manager Amit Mehta, who was later joined by co-manager Austin Forey (pictured) in 2015.
3. JOHCM Global Emerging Markets Opportunities23.9% China weighting, 90.4% five-year total return
Headed up by co-managers James Syme (pictured) and Paul Wimborne since its launch in 2011, the £243.9m fund currently has 52 holdings, with its largest constituent, Samsung, accounting for 9% of the fund. The managers take a top-down view on markets, then look to identify quality growth stocks within their preferred countries.
4. FF Emerging Markets Focus25.8% China weighting, 129.1% five-year total return
Managed by Alex Duffy, who also heads up the Fidelity Funds Latin America fund, this $947m SICAV has its largest proportional overweights relative to the index in South Africa, India, Hong Kong and Peru. It is a highly-concentrated portfolio, with its top ten holdings accounting for 59.5% of the overall portfolio.
5. ASI Emerging Markets Income Equity 26.2% China weighting, 102.7% five-year total return
This £912m fund, which has a dividend yield of 1.8%, aims to beat the MSCI Emerging Markets index by 2% per annum before charges and maintain a greater yield, over rolling five-year periods. Launched in 2012, it has been managed by Matthew Williams and Adam Montanaro since 2018 and has 86 holdings.
6. GAM Star Emerging Equity27.8% China weighting, 91.4% five-year total return
This £11m fund has been headed up by co-managers Tim Love (pictured) and Joaquim Nogueira since 2017 and March 2021 respectively. Its largest individual holding is Taiwan Semiconductor Manufacturing Company at 9.2% of the portfolio, while its top ten holdings account for 36%. The fund looks to achieve growth through bottom-up stock selection.
7. Liontrust Emerging Markets28% China weighting, 92% five-year total return
This £23.5m fund, which is managed by Ewan Thompson (pictured), has a highly concentrated portfolio of 35 stocks. The manager also heads up the Liontrust India fund, having previously run both mandates at Neptune, before moving to Liontrust in 2019. Liontrust Emerging Markets has an active share of 69.6%.
8. Invesco Global Emerging Markets29.2% China weighting, 104.3% five-year total return
This £326m fund was launched in 2012, but has been co-managed by William Lam (pictured) and Ian Hargreaves since 2018, and Charles Bond since 2020. The fund looks for companies the managers believe are underappreciated by the broader market and whose share prices are "substantially below" the team's estimated value.
9. Goldman Sachs Emerging Markets CORE Equity Portfolio29.3% China weighting, 100.2% five-year total return
This $2.9bn Luxembourg-domiciled SICAV has a highly diversified portfolio of 247 holdings, although its ten largest individual positions account for a third of the overall fund. Headed up by co-managers Len Ioffe, Dennis Walsh, James Park and Osman Ali, the fund has similar style, sector, risk and capitalisation characteristics to the index, but generates alpha through stock and country selection.
10. Templeton Global Emerging Markets29.7% China 111.9% five-year total return
Chetan Sehgal's (pictured) £44m fund, which he took over from Mark Mobius in 2017, has a portfolio of 72 holdings and a yield of 1.1%. It invests in companies from across the market cap spectrum, although more than half of its holdings are currently more than £50bn in size. The portfolio's average price-to-earnings and price-to-book ratios stand at 15.5x and 2x respectively.
Given the MSCI Emerging Markets index now has a 37.5% weighting in Chinese equities, some investors may worry about inadvertently 'over exposing' their portfolio to the market.
Investment Week looks at the top ten funds in the IA Global Emerging Markets sector which have beaten the index over the past five years while maintaining less than a 30% exposure to China.