Emerging-Markets Funds Sizzle This Week

This week marks the beginning of a new season. With the summer solstice on June 21, traders across the country, after being repeatedly whipsawed up and down, must have truly felt as if it was the longest day of the year.

Sidestepping this domestic volatility, all 99 of the emerging-markets funds we track gained in value over the five trading days ending June 21. (See the table below for the top 10 best performers.)

(uupix)ProFunds UltraEmerging Markets (UUPIX), with its 200% leverage, returned 6.15%. Over the last year, the fund has skyrocketed 128.11%.

In second place, the (msf)Morgan Stanley Emerging Markets Fund (MSF) converted 13.0% holdings in Russia, 10.7% in Brazil, 10.7% in South Korea, 10.3% in Mexico and 9.6% in China into a gain of 4.02%.

The fund's holdings in the Chinese insurance industry soared this past week. PICC Property & Casualty Company jumped 33.40% in a move so large that the company's board released a statement saying it was "not aware of any reasons for such increases."

But two other holdings -- Ping An Insurance Group, up 14.65%, and China Life Insurance Co, up 14.46% -- climbed on word that the Chinese government might let insurers diversify their investments to include overseas securities.

Rounding out the top three is (FEAXX)Fidelity Advisor Emerging Asia (FEAAX). The fund's largest concentration of sectors include 15.4% in banks, 9.7% in real estate, 8.3% in semiconductors, 6.3% diversified financial services, 6.3% telecommunications and 4.6% Internet.

This fund's biggest winner is the Beijing Capital International Airport Company. China's busiest airfield landed a total return of 23.50% for the week on the news that the company closed a deal to lease 62 check-in counters, offices and warehouses in two terminals for $3.02 million per year. On news that India's central bank cleared the way for foreign ownership, Educomp Solutions followed closely behind with a solid 22.76% return.

Even in this spring and early summer of discontent, the lagging-emerging markets funds managed small gains. The (ETF)Emerging Markets Telecommunications Fund (ETF) is a closed-end fund, not an exchange-traded fund, even though its ticker is ETF. The fund was practically disconnected from the market, with a return of just 0.37%. (See the second table below for the sector's worst-performing funds this week.)

Also gaining less than 1% is (NILIX)Neuberger Berman International Large Cap (NILIX), which claims to target emerging industrialized markets. Although the fund benefited from an 11.25% gain in Australia's Paladin Resources, this was offset by its stake in British supermarket chain Tesco, which fell 6.79% on the announcement that, despite rising costs, it was cutting prices to compete with Wal-Mart (WMT).

As you do your quarterly rebalancing of your portfolio in the next few weeks, consider adding exposure to the emerging markets. It might be a rough summer for domestic stocks, so buying funds that hold stocks not correlated to the U.S. markets can help you diversify.

Top Performing Emerging Markets Funds*
Fund	Ticker	Rating	Fund Type	1-Week Total Return
ProFunds UltraEmerging Markets	UUPIX	U	Open-End	6.15%
Morgan Stanley Emerging Markets Fund	MSF	B	Closed-End	4.02%
Fidelity Advisor Emerging Asia Fund	FEAAX	A-	Open-End	4.00%
Principal Investor Fund Inc - Principal Intl Emerging Markets	PRIAX	C+	Open-End	3.68%
Schroder Emerging Market Equity Fund	SEMVX	U	Open-End	3.57%
Nicholas Applegate Emerging Markets Fund	NAGIX	U	Open-End	3.53%
Templeton BRIC Fund	TABRX	U	Open-End	3.52%
Wells Fargo Advantage Emerging Markets Focus Fund	MNEFX	C+	Open-End	3.50%
Delaware Emerging Markets Fund	DEMAX	C	Open-End	3.48%
Dreyfus Premier Emerging Markets Opportunity Fund	SEOAX	U	Open-End	3.41%
* For the five trading days ending June 21 Source: Bloomberg

Worst Performing Emerging Markets Funds*
Fund	Ticker	Rating	Fund Type	1 Week Total Return
Emerging Markets Telecommunications Fund	ETF	B+	Closed-End	0.37%
Neuberger Berman International Large Cap Fund	NILIX	U	Open-End	0.94%
ING Templeton Foreign Equity Portfolio	IFTIX	U	Open-End	1.05%
T Rowe Price Intl Funds - Emerging Europe & Mediterranean	TREMX	C+	Open-End	1.16%
John Hancock International Equity Index Trust A	JEIEX	U	Open-End	1.24%
TA IDEX Multi Manager International Fund	IMNAX	U	Open-End	1.26%
AIM Developing Markets Fund	GTDDX	B	Open-End	1.44%
Metzler/Payden European Emerging Markets Fund	MPYMX	B-	Open-End	1.56%
ING Emerging Countries Fund	NECAX	A	Open-End	1.71%
American Funds - New World Fund	NEWFX	B+	Open-End	1.79%
* For the five trading days ending June 21 Bloomberg

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