Emerging markets make a return to top of the outperformance tables

1st August 2014


After a tumultuous 2013, emerging market have bounced back this year to provide outperformance for investors.

Six out of the top 10 performing funds are invested in emerging market economies, according to research by Hargreaves Lansdown, although the stockbroker notes there has been a variety of performance within emerging markets this year.

Asia Pacific shares have done well, returning 8.9%, but Emerging European shares have lost 6.9%. There is also wide dispersions within markets in Eastern Europe as Turkey has returned 23.3% this year while Russian shares have, unsurprisingly, fallen 16.2%. In Asia, china has returned 5.6% while India returned 21%, driven by optimism surrounding the election of Narendra Modi.

The top 10 performing funds of 2014 so far by growth are:

WAY Charteris Gold Portfolio: 33.04%
HSBC GIF Indian Equity: 32.33%
JPM Turkey Equity: 29.93%
Smith & Williamson Global Gold & Resources: 28.84%
Neptune India: 27.91%
Junior Gold: 27.58%
First State Indian Sub-continent: 25.83%
Jupiter India: 24.92%
BlackRock Gold & General: 24.45%
JPM Emerging Middle East Equity: 23.63%

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: ‘Some emerging markets funds have bounced back this year from a lacklustre 2013. However, looking at emerging markets in aggregate masks an assortment of fortune within individual markets, and some funds have struggled, particularly those with heavy exposure to Russia.

‘This illustrates the fact that country-specific funds are for brave investors only, and those without nerves of steel should consider investing in more general emerging markets funds, where a fund manager can run a diversified portfolio and dictate which markets to invest in, and when.’

He added that gold funds have also performed well this year while smaller companies funds, the recent darlings of the investment world, have found themselves lower down the rankings.

‘So far 2014 is turning out to be a very different beast to 2013, when these two sectors found themselves in opposite ends of the field, demonstrating how chasing last year’s winners can be a losing game,’ said Khalaf.


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