Top 5 Best and Popular Emerging Markets Stock Mutual funds 2011

emerging markets stock mutual fund logo
emerging markets stock mutual fund logo

Intro

With developed countries (USA & Europe) economy is cooling down or at least slow down, everyone will look at growing sector or market to invest. Stock mutual can consist of domestic equity, international equity and emerging market equity. It may also include various specialty mutual fund such as precious metal & minerals fund, country fund, certain regional fund and more. One of these markets is diversified emerging market. Emerging market usually include most developing countries in Asia, Africa and Eastern Europe. Some of these countries are known as BRIC acronym (Brazil, Russia, India and China). Most analysts predict emerging market will drive all future growth for the next decade. Investor should look to invest in emerging market. Emerging market is part of international market; this mean investing in this emerging market can be volatile at the times. Please invest responsibly.

I think emerging market should be part of your investment portfolio whether it is in your 401k retirement or brokerage account. The question is how to invest in emerging market; there are two easy ways to invest such as using ETF and Mutual Funds. The following article will discuss about Top 5 best and popular mutual funds in emerging market.

The following is top 5 best emerging market mutual funds in term of asset. What I like is usually big asset is equal to big confident by investor or institutional money to invest in these funds. I also like most of these asset managers as they are well known to many investors or institutional. If you are interested in top mutual funds in general please check my previous article Top 5 Popular Best Mutual Funds. Note: Mutuals fund can be classified into 2 categories such as bond mutual funds (taxable bond and municipal) and stock mutual funds.

Top 5 Best & Popular Emerging Market Mutual Funds by asset

1. Vanguard Emerging Market Stock Index, VEIEX

2. American Funds New World Fund A, NEWFX

3. Lazard Emerging Markets Equity, LZOEX

4. Oppenheimer Developing Markets, ODMAX

5. DFA Emerging Markets Value Portfolio DFEPX

Note: If you prefer Emerging Market Stock ETF, Please check:

(click column header to sort results)
No  
Mutual Funds Description  
Ticker  
Expense ratio  
Morningstar Rating  
Total Asset  
Min Invest  
1 yr  
3 yr  
5 yr  
10 yr  
1
Vanguard Emerging Mkts Sock Index Fund
VEIEX
0.40%
3
54 Bil
3000
19.73%
-2.19%
13.50%
13.66%
2
American Funds New World Fund A
NEWFX
1.17%
4
19 Bil
250
17.76%
-0.85%
11.99%
11.56%
3
Lazard Emerging Markets Equity Portfolio
LZOEX
1.55%
4
18 Bil
2500
22.94%
1.76%
14.84%
15.77%
4
Oppenheimer Developing Markets
ODMAX
1.43%
4
18 Bil
1000
27.15%
4.20%
16.35%
17.93%
5
DFA Emerging Markets Value Portfolio
DFEPX
0.90%
4
11 Bil
0
22.19%
0.37%
17.54
19.11
Table Comparison of Emerging Market Mutual Fund
vanguard emerging market fund countries list
vanguard emerging market fund countries list

1. Vanguard Emerging Market Stock Index Fund

Looks like Vanguard take the trophy again in emerging market fund. Ever since Vanguard becomes the largest asset manager by leaping Fidelity, I believe most investor has moved their asset to Vanguard. Vanguard funds usually are a passive type mutual fund (i.e. tracking index) and have low expense ratio for their mutual funds. This can be advantageous for investor. That means fewer fees for asset management and more return.

The Vanguard Emerging Market Stock Index portfolio tracks the MSCI Emerging Markets Index, which is weighted toward the largest companies in the largest emerging markets. Because of this, China, South Korea, India, Russia and Brazil make up 65 percent of the portfolio. Currently the fund consists of 748 stocks common stocks of companies located in emerging markets around the world. The lead manager is Duane F. Kelly since 1994.

Please note there is a small purchase fee (0.50%) and redemption fee (0.25%) for certain asset class. If you are an active trader, these fees can cut to your profit.

The fund performance is as follows (VEIEX):

1 Year: 19.73% per year

3 Year: -2.19% per year

5 Year: 13.50% per year

10 Year: 13.66% per year

Note: This return is an annualized return. So for total return of 10 years are 136.6%.

This fund is also offered in most 401K fund selection. Some asset classes of fund have lower expense ratio fee, small purchase fee, and redemption fee. Other tickers of Vanguard Emerging Market Stock Index fund are: VEMIX, VERSX, and VEMAX.

The primary portfolio consists of blend stocks (i.e. growth & value stock). Top 10 largest equity holdings for this fund include China Mobile, Vale SA, Petroleo Brasileiro, Gazprom, America Movil, Industrial & Commercial Bank of China, Samsung Electronics GDR, China Construction Bank, Samsung Electronics, and Itau Unibanco Holding.

American Funds holding breakdown
American Funds holding breakdown

Top 5 Emerging Market Equity Mutual Funds according to US News.

  1. Oppenheimer Developing Markets Fund, ODMAX
  2. Delaware Pooled Trust Emerging Markets Portfolio, DPEMX
  3. Eaton Vance Tax Managed Emerging Markets Fund, EITEX
  4. John Hancock Funds2 Emerging Markets Value Fund, JEVNX
  5. Schroder Emerging Market Equity Fund, SEMVX

2. American Funds New World Fund

American Funds family is very famous in various 401k accounts. This American Funds’ New World Fund is a diversified international fund that has managed to stay less volatile than most other emerging-market rivals. The portfolio consists primarily of equities, with smaller holdings of government bonds, corporate bonds and cash.

As an actively managed mutual fund, the investment objective is long-term capital appreciation. The fund invests primarily in common stocks of companies with significant exposure to countries with developing economies and/or markets. The lead manager is Mark E. Denning since 1999. If you choose this fund, please note that some fund classes have a front end sales load of 5.75%.

You may find other asset class funds which don’t have front end sales load and lower expense ratio as this fund is also offered in most 401K fund selection. Other tickers of American Funds New World fund are: CNWAX, NEWBX, CNWBX, NEWCX, CNWCX, NWFFX, RNWGX, CNWFX, CNWEX, NFFX, RNWBX, RNWFX, RNWEX, RNWCX and RNWAX.

The primary portfolio consists of growth stocks. The top 3 sectors of fund as July 2010 are Commercial Banks, Wireless Telecommunication Services and Oil & Gas energy sector. Top 10 largest equity holdings for this fund include América Móvil (Mexico), Itaú Unibanco Holding (Brazil), Nestlé (Swizerland), Pharmstandard (Russian Federation), Turkcell (Turkey), Itaúsa (Brazil), MTN Group (South Africa), Anheuser-Busch InBev (Belgium), Kingboard Chemical Holdings (China), and Industrial & Commercial Bank of China (China).

Lazard fund performance review
Lazard fund performance review

3. Lazard Emerging Markets Equity

The Lazard Emerging Markets Equity Portfolio fund has performed better by picking undervalued stocks of companies based in a wide selection of emerging-market countries. The Lazard Emerging Markets Equity fund objective is to provide long-term capital appreciation by investing in companies with strong, sustainable financial productivity at attractive valuations. The lead manager of this fund is James Donald since 1997. There is no front end sales load for this fund, though the expense ratio is slightly higher than other funds.

This fund is also offered in most 401K fund selection. If you have 401k account, you can also invest in LZEMX which is provided to institutional account. This asset class of fund has a lower expense ratio of 1.15% than LZOEX. Another ticker of Lazard Emerging Markets Equity fund is: LZEMX.

The primary portfolio consists of value stocks of emerging market companies. The top 3 sectors of fund as July 2010 are Financial, Information Technology, and Basic Materials. Top 10 largest equity holdings for this fund include Turkiye Is Bankasi (Isbank), Banco Do Brasil, Vale (ADR), Cielo, Redecard ,Taiwan Semiconductor Manufacturing, Shinhan Financial Group, Usinas Siderurgicas de Minas Gerais, Lukoil (ADR), and Philippine Long Distance Telephone (ADR).

Oppenheimer Asset Allocation
Oppenheimer Asset Allocation

4. Oppenheimer Developing Markets, ODMAX

Oppenheimer Developing Market fund has some challenge recently with their lead manager leaving during 2007. In 2007, Mark Madden left Oppenheimer’s Developing Markets fund after a short three-year stint provide annualized returns above 30 percent. New manager Justin Leverenz needed to simulate the outstanding return of previous manager. Morningstar also removed this fund from their elite recommendation list of diversified emerging market funds during this time. Many investor and institutional investment moved out from this fund and this action has plummeted the total asset by more than 1 billions. After 3 years, the fund has provided a decent annualized return and the asset level has risen to pre-crash level since then.

The Oppenheimer Developing Markets investment aggressively seeks capital appreciation. The fund normally invests more than 80% of assets in equity securities of issuers whose principal activities are in at least three developing markets. . If you choose this fund, please note that some fund classes have a front end sales load of 5.75%.

You may find other asset class funds which don’t have front end sales load and lower expense ratio as this fund is also offered in most 401K fund selection. Other tickers of Oppenheimer Developing Markets are: ODVBX, ODVCX, ODVYX, and ODVNX.

The primary portfolio consists of value stocks of emerging market companies. The top 3 sectors of fund as July 2010 are Financial, Information Technology, and  Basic Materials. As of July 2010, Top 10 largest equity holdings for this fund include Infosys Technologies, America Movil, Petroleo Brasileiro, NHN Corp, Magnit, SABMiller, CNOOC Ltd, Anglo American plc, Hong Kong Exchanges & Clearing Ltd, and HDFC Bank Ltd.

DFA country allocation
DFA country allocation

5. DFA Emerging Markets Value Portfolio, DFEPX

Like other funds offered by Dimensional Fund Advisors, this DFA Emerging Markets Value Portfolio fund objective is to provide investors with concentrated exposure to an emerging market value stocks.

The primary objective is to seek long-term capital appreciation. The fund invests normally at least 80% of net assets in emerging markets investments that are defined as Approved Markets securities and may purchase emerging market equity securities across all market capitalizations whether it is large cap, mid cap and small cap. The fund lead manager is Karen Umland since 1998. There is no front end sales load for this fund. The expense ratio of 0.90% also is lower than other fund except the vanguard emerging market stock index fund.

You may find other asset class funds which provide lower expense ratio as this fund is also offered in most 401K fund selection. Other ticker of DFA Emerging Markets Value Portfolio is: DFEVX.

The primary portfolio consists of value stocks of emerging market companies. The top 3 sectors of fund as July 2010 are Financial, Basic Materials and Energy sectors. As of September 2010, Top 10 largest equity holdings for this fund include Gazprom OAO, Bank of China LTD, Reliance Industries, ICICI Bank, Lukoil, BM&FMOVESPA, Banco Santander Brasil SA/Brazil, Hyundai Motor, Posco, CEMEX SAB, and Usinas Siderurgicas de Minas Gerais.

Where can I purchase these mutual funds?

Usually you will need mutual fund providers as well as brokerage or retirement account (401k account) to buy these mutual funds. Please check the following brokerage/ providers:

  • Fidelity – one stop shop for mutual fund or ETF as well as cash management banking. No fee for fidelity fund and NTF mutual funds.
  • Vanguard – offer various Vanguard mutual funds that track indexes as well as ETF for free
  • T. Rowe Price – only offer their fund. If you have 401k, they may offer various selection according to your company investment plan.
  • Scottrade – Offer various mutual funds. 3,000 No load & No Transaction Fees (NTF) fund for free and 15,000 mutual funds as well as trading account for $7.00 per trade. You can buy the American Fund family for free and select no load fund. I also notice DFA fund is provided by Scottrade as well.
  • Etrade – Offer various mutual funds as well as trading account
  • Zecco – Offer various no load mutual funds for $10.00 as well as broker trading account with free 10 trades per month with >$25k balance.


Disclosure: I have no affiliation with any of these mutual funds. I also have no position in any of these funds. Please do your own research for additional details. Please trade and invest responsibly. Past Performance is No Guarantee of Future Results.

Updated 3/15/2011

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Comments 3 comments

LillyGrillzit profile image

LillyGrillzit 6 years ago from The River Valley, Arkansas

Thank you for another common sense, and good advice Hub on financial investments, namely Emerging Market Mutual Funds! I know this will help those trying to invest without betting the entire farm. Write On!


chan0512 profile image

chan0512 6 years ago from Camarillo, CA Author

Thanks! I'll write another article hopefully next week. :)


N.satyanarayana 6 years ago

Thank you for this intelligence in view of financial investments in Emerging Market Mutual Funds and this will help to investors without any exaggeration.

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