Indexed Emerging markets equity fund

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moneymakeover

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This fund which tracks the MSCI Emerging markets equity fund had 1 year growth of 20%

It's category 7: high risk

Opinions?

Since 2013 more like only 35%

By contrast the world equity fund had 12% last year

But 100% growth since 2012

Regards
 
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Risk and return. More investment risk in the Emerging Markets. It fell by -50.76% in 2008, while the World fell by -38.83%. Similarity, in 2011, Emerging Markets fell by -15.44% while the World fell by -3.75%. 2013 and 2015, Emerging Markets had negative return while the World had very strong years.

We never know who's going to be #1 or when they are going to be #1.


And seeing as we are just 18 days into the new year, I wouldn't be reading too much into YTD figures!


Steven
www.bluewaterfp.ie
 
Active should outperform passive in Emerging Markets so personally I’d avoid “cheap” trackers there.
 
Because when you buy the index in emerging markets, you buy everything...the corrupt semi-state joke companies for example. A decent active manager can avoid those pretty easily, something that’s not relevant or doable in an evolved and efficient market like the US.
 
Gordon Gekko said:
Because when you buy the index in emerging markets, you buy everything...the corrupt semi-state joke companies for example. A decent active manager can avoid those pretty easily, something that’s not relevant or doable in an evolved and efficient market like the US.
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Way too much of a generalisation! Active managers try to track the index and both active and passive very often to not have full access to the market, thus both often end up using derivatives and futures to try and replicate the risk attributes. Be very careful what you buy in emerging markets, read all the documentation and fully understand the options available to the management team.
 
Jim2007 said:
Way too much of a generalisation! Active managers try to track the index and both active and passive very often to not have full access to the market, thus both often end up using derivatives and futures to try and replicate the risk attributes. Be very careful what you buy in emerging markets, read all the documentation and fully understand the options available to the management team.
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I disagree; active managers try to beat the index.
 
Gordon Gekko said:
I disagree; active managers try to beat the index.
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No, active managers try to keep the fees rolling in and they have a number of challenges:
- They are not able to be fully invested, because they need to keep a percentage in cash to handle fees, people cashing out and so on
- They need to attract investors, so they have to have the popular stocks of the day in the fund, even if it means buying high
- By the same token they need to make sure they are not holding anything that does not meet earning expectations - just watch the the order sizes before and after earnings reports.
- Now to at least have a chance to achieving the benchmark, they will some derivatives etc... which may or may not work out well.

Active managers that achieve the benchmark year on year over the long term are actually the exception, not the rule.

The only manager that have the luxury of concentrating on beating the benchmark are in family offices, pension funds and similar types of institution.
 
moneymakeover said:
This fund which tracks the MSCI Emerging markets equity fund had 1 year growth of 20%. It's category 7: high risk. Opinions?
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Interesting. Why has this fund a risk rating of 7? A quick internet search will show you an MSCI EM ETF with a risk rating of 6 and similar for a MSCI EM tracking fund. It's my understanding that 'risk' here means historic volatility over the previous 5 years, according to the SRRI methodology. So if this fund is tracking an index why has it a higher volatility than an ETF that tracks the same index over the same time period?
 
It may be that the risk rating I quoted is Irish Life

I think Irish Life ratings 1 to 7 are more conservative than external quoted risk ratings
 
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