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In the year 2004, financial institutions were promoting funds and certificates focused on emerging markets, and an individual made the decision to invest in this dynamic sector. Over the years, the individual's portfolio has included a variety of funds, each with its unique focus.
One of the funds in the individual's portfolio is the Baillie Gifford Worldwide Em. Mkts Leading Co. Fd B EUR Acc, a fund that concentrates on leading companies from China, Korea, Brazil, and Russia.
Another notable addition to the portfolio is the JPM Emerging Markets Small Cap C fund, a fund that concentrates solely on small caps. Since its launch in November 2007, this fund has generated a return of 170%. Austin Forey, who joined J.P. Morgan Asset Management in 1994, is a portfolio manager for this fund.
The Magna New Frontiers Fund R EUR, another fund in the portfolio, focuses on frontier markets and invests in companies regardless of whether they are included in the index. Stefan Böttcher, who has been with the investment boutique since 2001, leads the management team of this fund. The Magna New Frontiers Fund R EUR has outperformed among frontier markets funds, with a price more than doubling since April 2020.
The HSBC BRIC Equity fund was added to the portfolio in 2006, reflecting the initial enthusiasm for focusing on the BRIC countries (Brazil, Russia, India, and China). However, the interest in these countries has since waned.
In the current landscape, the top-performing emerging market funds in terms of long-term returns include both ETFs and mutual funds with strong multi-year performance, particularly those focused on China and technology sectors.
The iShares MSCI China Small-Cap ETF (ECNS) and KraneShares Hang Seng TECH Index ETF (KTEC) are leading ETFs in terms of 1-year returns, with exceptional short to medium-term returns driven largely by Chinese equities and technology-focused sectors.
In terms of mutual funds, the GAM Sustainable Emerging Equity Fund and MFS Meridian Emerging Markets Equity Fund stand out. The GAM Sustainable Emerging Equity Fund has delivered top-quartile results over 1, 5, and 10 years, except in 2015 and 2018, and has an ESG focus. The MFS Meridian Emerging Markets Equity Fund, on the other hand, has shown strong top-10 performance within the IA Global Emerging Market Sector, with strong recent annual returns but mixed results over 5 and 10 years due to weaker 2021-2022 performance.
These funds outperform by focusing on stock selection, particularly in China and emerging market technology, healthcare, and consumer sectors. Analysts recommend diversification and focus on fundamentals like value, quality, and sentiment rather than macro bets for emerging markets in 2025.
It's worth noting that some funds, like the abrdn SICAV I - Emer. Markets Equity A Acc USD fund, which the individual invested in back in 2004, are no longer available as they were closed in 2013.
In conclusion, for those seeking long-term returns in the emerging market sector, funds like the ECNS, KTEC, GAM Sustainable Emerging Equity, and MFS Meridian Emerging Markets Equity Fund are worth considering. These funds offer a mix of ETFs and actively managed funds, each with a focus on China and emerging market technology, healthcare, and consumer sectors.
The individual's portfolio, initially focusing on emerging markets, expanded to include funds like the JPM Emerging Markets Small Cap C fund and the Magna New Frontiers Fund R EUR, which invest in small caps and frontier markets, respectively. In the current market landscape, other funds like the iShares MSCI China Small-Cap ETF (ECNS) and KraneShares Hang Seng TECH Index ETF (KTEC) have shown exceptional returns, mainly due to Chinese equities and technology-focused sectors.
