Global Emerging Market equity funds are staging a comeback according to Justin Tay, Zenith’s lead analyst on the Emerging Market and Asian Equities sector.
Zenith Investment Partners has just released its Emerging Markets and Asian Equities Sector Review, and commenting on the review, Tay said: “The past 12 months has certainly seen a turnaround in the fortunes of Emerging Market equities, with Emerging outperforming Developed Market peers by 5.2%. The reversal in several key macroeconomic factors, particularly a consolidating US Dollar, recovering commodity prices and improvement in the political environment for some economies have all contributed to the stronger performance in Emerging Markets.”
Tay added: “Given the underperformance of Emerging Markets over the past few years it is easy to forget that Emerging Market equities have in fact outperformed Developed Markets over the longer- term.”
Tay highlighted: “We believe the longer-term outlook for Emerging Market equities continues to be attractive given the higher expected growth rates for their underlying economies and favourable demographic trends.”
In summarising the results of the review, which covers the 12 months ending September 2016, Tay noted the difference in outcomes for Emerging Market managers versus managers who exclusively focus on the Asia ex-Japan region. “Zenith’s rated active Global Emerging Market equity managers produced an average return of 7.8% compared to the Emerging Market benchmark which returned 7.2%. In contrast, Zenith’s active managers who exclusively manage equities within the Asia ex- Japan region delivered an average return of 4%.”
When explaining the scope of the Zenith review, Tay noted: “In previous years, Zenith has included Emerging Market and Asian Equities funds in our overall Global Equities sector review. But this year, given the increasing importance of the region and number of strategies available, we have produced a dedicated Emerging Markets and Asian Equities sector report. In that report we introduce Emerging Markets as an asset class, as well as providing a detailed overview of its composition, the investment case and implementation options.”
Summary of the Zenith 2016 Emerging Markets and Asian Equities Sector Review
From an initial universe of 37 products:
• 2 were rated “Highly Recommended”
• 6 were rated “Recommended”
• 2 were rated “Approved”
• 17 were “Not Rated”
