PRODUCTS&MARK
Emerging markets diverge as Covid leaves its mark
LARGESTEMERGINGMARKETEQUITYFUNDS PROVIDER
FUND MANAGER DOMICILE BlackRock Vanguard JPMorgan Vontobel
Fund Managers Em Mkts R EUR Acc Fidelity
Hermes
Fidelity Em Mkts A-DIST-USD
Schroders Comgest JPMorgan Nordea
Schroder ISF Em Mkts A Dis USD AV
Opps A (acc) USD Nordea 1 - Emerging
Stars Equity BI EUR * Supplied by Morningstar; Returns through to 30/09/2020
Emerging Mkts USD Acc JPM Emerging Mkts
Comgest Growth
iShares EmergMkts Idx Kieran Doyle (IE) Flex Acc GBP
Vanguard Emerg Mkts Stk Idx Inv EUR Acc
Vontobel mtx Sust EmMkts Ldrs I USD
N/A
JPM Emerging Markets Austin Forey & Equity A (dist) USD
Thomas Schaffner
Leon Eidelman; Roger Merz &
Federated Hermes Glb Gary Greenberg
MSCI EM NR USD Ireland
Ireland Luxembourg Luxembourg Ireland Nick Price & Amit Goel Luxembourg
Robert Davy & TomWilson
Team Team Luxembourg Ireland Luxembourg
Juliana Hansveden & Luxembourg Emily Leveille
CURRENT PERFORMANCE NET
€9.9bn €8.8bn €8.4bn €6.2bn €4.6bn €4.3bn €3.9bn €3.8bn €3.5bn €3.2bn 2.2% 2.6% 11.8% 3.4% 5.5% 8.0% 3.3% -3.5% 1.4% 17.1%
8.3% 7.8%
1 YEAR 3 YEAR 5 YEAR KIID
ASSETS* RETURN RETURN RETURN CHARGE 2.8%
46.2% 46.2%
7.5% 28.1% 12.5% 13.7% 14.0% 9.9% -3.0% 11.4% 24.1% 43.9% 82.3% 72.7% 68.2% 47.2% 49.8% 25.5% 58.7% 77.7% 0.06% 0.23% 1.74% 1.16% 1.61% 1.93% 1.87% 1.56% 1.75% 0.95%
EMERGINGMARKETS WRITTENBY ELLIOTSMITHER
Coronavirus has sparked volatility across emerging markets, but clear winners can be found in terms of both regions and sectors
I
t is often tempting to lump emergingmarket economies into onehuge bloc, despite the obvious differences between markets.But the coronavirus
pandemic has illustratedhowthese economies performvery differently to one another. EmergingAsianequities outshone
the broader asset class in the third quarter, with investorsheadingfor local technologycompanies,while LatinAmerica struggledandEuropean markets alsounderperformed.
66 OCTOBER/NOVEMBER 2020
While it is too early to assess the
full damage of Covid-19, and the longer-term changes it will trigger in global supply chains and demand for emerging markets export, it is clear that some economies have made it to the other side while others face an uphill task, says Kunjal Gala, global emerging markets co-portfolio manager, international at Federated Hermes. “Marketswhich were ‘first-in’ and
‘first-out’ have led the rebound in emerging markets and those still struggling with the first-round effects have performed theworst,” he explains, “which has resulted in a two-speed recovery.” In China,KoreaandTaiwan,
whichmakesup65 per cent of theEM investment universeandindex, the virus situation has been controlled and economic activity is back to
85-90 per cent of pre-Covid levels with stockmarkets for all threemoving into positive territory. In particular, China’s recovery has
been faster than expected. “Markets are inextricably linked
andChina’s V-shaped recovery to pre-Covid levels is an important driver of recovery indemand supporting exportmarkets likeKorea andTaiwan;but, beyondthat, the ripple effect ofBeijing’s focusedFAI [fixed-asset investment] stimulus is supporting the commodity-sensitive markets ofEmeaand LatinAmerica,” he explains. Despite thedamagedonebythe
pandemic, theemergingmarket structural growthstory remains intact, believesMrGala, drivenby anaspiring, growingmiddle class, risingdigitalisation, reformsand infrastructuredevelopment.
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