Which are Fund selector’s favourite Emerging Markets funds?

The SharingAlpha initiative gives us the possibility to find out which fund managers and funds are preferred by European advisors and fund selectors.

Investor Relations Specialist

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We have received the latest data available from SharingAlpha that shows the Fund Selector’s favourite funds. On this occasion we have selected Emerging markets to understand which have been the preferred options chosen by the professionals.

The SharingAlpha initiative gives us the possibility to find out which fund managers and funds are preferred by European advisors and fund selectors. Fund selectors are asked to rate funds according to their expectations based on three parameters (3 P’s):

  • The experience and competitive advantage of the fund manager and his team (People)
  • The cost of the fund (Price)
  • The way the strategy is executed in terms of risk management (Portfolio).

On this occasion we have chosen to analyse the two emerging funds in this month’s SharingAlpha data;

DPAM L Bonds Emerging Markets Sust

Michael Vander Elst Portfolio Manager of DPAM L Bonds Emerging Markets Sustainable

DPAM L Bonds Emerging Markets Sustainable, is a fund that invests primarily in bonds issued by emerging countries and regional and international public bodies, such as the World Bank or the European Bank for Reconstruction and Development.

The bonds in which the fund invests are selected on the basis of sustainable development criteria, such as social equity, environmental awareness, socially equitable political and economic governance.

Our investment strategy combines a comprehensive top-down analysis of the macroeconomic environment and market performance with a bottom-up selection process based on fundamentals and value. The objective is to create a robust portfolio with solid liquidity at all times and to avoid defaults through rigorous credit analysis that identifies the most consistent issuers. The end result is unconstrained investment management in emerging markets.

Market Overview

At DPAM, we are convinced that markets are now much more prepared for this new phase of tapering. Firstly, emerging market growth will gain momentum from the second half of 2022 and secondly, monetary normalisation has resulted in better anchoring of inflation expectations.

Local central banks have responded to rising inflation by raising interest rates, but most of them have been unable (so far) to bring the real policy rate back into positive territory. In the meantime, base effects will lead to lower inflation in the future.

This combination of additional interest rate hikes and base effects will bring real interest rates back into positive territory, a condition for more stable local currency foreign exchange markets in emerging countries. In addition, the relatively low positioning (compared to 2013) and cheap valuations in many countries make local currency debt attractive.

BlackRock Frontiers Ord

Sam Vecht and Emily Fletcher Portfolio Managers BlackRock Frontiers Ord

The investment objective is to achieve long-term capital growth by investing in companies domiciled or listed in, or exercising the predominant part of their economic activity in, less developed countries.

These countries are any country which is neither part of the MSCI World Index of developed markets, nor one of the eight largest countries by Market Cap in the MSCI Emerging Markets Index.

Frontier markets will continue to be driven, to a significant extent, by local factors and by domestic investor flows and this aspect continues to offer significant diversification benefits in these challenging times. Our portfolio management team believe that a return to economic growth, and a lower fiscal burden assumed by emerging and frontier markets during the COVID-19 easing, should mean that many of our chosen markets recover relatively quickly in the forthcoming months, although volatility is likely to remain a factor and selectivity will be key.

The team’s focus on long term capital growth provides us with confidence that the holdings in the Company’s portfolio are well placed to prosper as economic activity resumes. In addition, they believe that there are significant value opportunities available in the markets in which we invest. Therefore, your Board believes that the Company’s frontier universe continues to represent a very compelling proposition for the medium to long-term investor.

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Which are Fund selector’s favourite Emerging Markets funds?