Why Small Cap Emerging Market Funds Win Big and How to Pick the Right Fund (Barron’s)
Barron’s has a lengthy article (Small-Stock Funds Win Big in Emerging Markets) about how small cap emerging market stocks are little followed by Wall Street and are often run by their founders, but frequently outperform their large cap peers. Why invest in and what should you look for in a small cap emerging market fund? Here are a couple of key points or takeaways:
- “If you look at the largest 10 emerging-market companies [e.g. Samsung], they derive, on average, only 20% of their revenues from their local economies, and everything else is from exports” – according to Julie Dickson, co-manager of the Ashmore Emerging Markets Small-Cap Equity fund (ESCIX).
- Small emerging-market companies frequently perform well because they are often run by their founders and are family-owned: “There is clear evidence that family businesses have consistently delivered superior growth and cash flows” – according to Philippe Langham, manager of the RBC Emerging Markets Small Cap Equity fund (RSMAX).
- “You need a deep bench of analysts. There are thousands of small companies, and you want to have analysts meet with those companies”- according to Fritz Kaegi, manager of the Columbia Acorn Emerging Markets fund (CAGAX).
The article mentioned the following tickers for small cap emerging market funds, which you can cut and paste into Google Finance or Yahoo! Finance:
WAEMX, WESNX, GPEOX, ESCIX, RSMAX, DRESX, CAGAX, ACINX, EWX
And here are their full names and tickers:
- Wasatch Emerging Markets Small Cap (MUTF: WAEMX)
- William Blair Emerging Markets Small Cap Growth Fund Class N (MUTF: WESNX)
- Grandeur Peak Emerging Markets Opportunities Fund Investor Class (MUTF: GPEOX)
- Ashmore Emerging Markets Small Cap Equity Fund Institutional Class (MUTF: ESCIX)
- RBC Emerging Markets Small Cap Equity Fund Class A (MUTF: RSMAX)
- Driehaus Emerging Markets Small Cap Growth Fund (MUTF: DRESX)
- Columbia Acorn Emerging Markets Fund Class A (MUTF: CAGAX)
- Columbia Acorn International Fund Class Z (MUTF: ACINX)
- SPDR S&P Emerging Markets Small Cap ETF (NYSEARCA: EWX)
Keep in mind that some of the above funds are now closed to new investors and as you can see below in the performance charts, their has been a mixed performance:
To read the whole article, Small-Stock Funds Win Big in Emerging Markets, go to Barron’s.
- Mark Mobius vs Passive Emerging Market Funds (CBS MoneyWatch)
- Obscure Stocks Make the Baron Emerging Markets Fund a Winner (Kiplinger)
- Emerging Markets Back in Favour Among European Investors (Citywire)
- Emerging Market Small Caps: Hidden Gems in Plain Sight? (Wellington Management)
- Shift Your Emerging Market Consumer Exposure from MNCs to Local Stocks (FE Trustnet)
- Indexes Often Get Emerging Markets Wrong (Barron’s)
- Better Investing Strategy: Blend Emerging & Frontier Markets (Financial Advisor)
- Oppenheimer’s Leverenz Blames “Radical Collapse” in FX Markets for Poor Performance (WSJ)
- Emerging Market Closed-End Funds List
- Emerging Market Equity Closed-End Funds List (Multiple Regions / Countries)