The Best and Worst Emerging-Market Funds

With the average stock in the fund's portfolio shedding 2.83% and no stock falling more than 11%, how did the fund lose 12.42%? Well, the net asset value of this fund sank 4.77%, because of larger holdings of the bigger losers. But the price of the fund is set by supply and demand, not just net asset value.

On Thursday Feb. 22, the closed-end fund was selling at an 11.8% premium above its net asset value. Traders continued to sell until a premium of only 2.8% remained. This crushed the price of the fund by 12.42%. Closed-end funds, unlike open-end ones, have a fixed number of shares and trade according to market demands.

The exchange-traded fund suffering the worst decline was the BLDRS Emerging Markets 50 ADR Index Fund (ADRE Quote).

The index tracks the 50 most actively traded American depositary receipts (ADRs), including American Movil SA de CV (AMX Quote), Taiwan Semiconductor(TSM Quote) and China Mobile (CHL Quote).

The average holding lost 8.04% with 12 of the 50 declining by double-digit percentages. ICICI Bank (IBN Quote) of India was slashed by 13.9% because of growth concerns as India's central bank tightens their money supply.

Investors screamed "mas cerveza" after Latin America's largest beverage company, Fomento Economico Mexicano (FMX Quote) announced 2% lower fourth-quarter net income. This drained off 13.04% of the company's market value.

Fomento Economico Mexicano is also a holding of the (FLATX Quote)Fidelity Latin America Fund (FLATX), but three other holdings fell more. Natura Cosmeticos SA (NATU3 -- Sao Paulo, Brazil) dropped 16.97%. Real-estate developer SARE Holdings(SARHY) and telecom company Embratel Participacoes (EMT Quote) fell 15.5% and 13.68% respectively.

Worst-Performing Emerging-Market Funds
Fund	Ticker	Rating	Fund Type	1 Week Total Return
Indonesia Fund	IF	C	Closed-end	-12.42%
Emerging Market Telecom Fund	ETF	B-	Closed-end	-9.89%
BLDRS Emerging Market 50 ADR	ADRE	C-	ETF	-8.35%
Templeton Emerging Markets Fund	EMF	C	Closed-end	-8.26%
Fidelity Latin American Fund	FLATX	C+	Open-end	-8.13%
US Global Accolade East European	EUROX	C-	Open-end	-8.10%
iShares MSCI Emerging Markets	EEM	C+	ETF	-8.01%
TCW Emerging Markets Eq I	TGEMX	B-	Open-end	-7.33%
Harding Loevner Emerging Market Inv	HLEMX	C	Open-end	-7.10%
Seligman Emerging Markets R	SERRX	B-	Open-end	-7.08%
Source: Bloomberg

The fund falling the least from the closing price on Thursday, Feb. 22, to the close on March 1 is the (IMSSX Quote)American Independence International Equity Fund (IMSSX). Down 3.77% for the period, it is now just below break-even so far in 2007 at -0.78%. The fund is open only to the 401(k) plan of Rent-A-Center (RCII Quote).

Best-Performing Emerging-Market Funds*
Fund	Ticker	Rating	1 Week Total Return
American Independence International Equity	IMSSX	A+	-3.77%
ING Emerging Countries A	NECAX	B+	-4.88%
AIM International Small Co A	IEGAX	A-	-5.02%
Van Eck Emerging Markets A	GBFAX	C+	-5.09%
Third Millennium Russia Fund	TMRFX	D+	-5.36%
Phoenix Insight Emerging Market A	HEMZX	C	-5.48%
Adv Inn Cir Acadian Emerging Market I	AEMGX	C+	-5.62%
Fidelity Adv Emerging Asia I	FERIX	B+	-5.65%
GMO Emerging Markets Fund V	GEMVX	B-	-5.68%
Eaton Vance Tax-Mgd Emerging Market Fd I	EITEX	A+	-5.68%
* All funds are open-end funds Source: Bloomberg

The markets around the world and in the U.S. stabilized after calming words from the current Fed Chairman Ben Bernanke. This coincided with backpedaling by former Fed Chairman Alan Greenspan saying that a U.S. recession this year was "possible" but not "probable."