The Daily Screen: The Best Emerging Market Funds
Emerging markets funds are getting whacked this year, but if you're looking for some diversification from the U.S. market and don't mind a hefty dollop of risk, they might be worth a look.
This pack of aggressive funds primarily invests in stocks of companies based in Latin America and Asia, and is the international fund category's equivalent of a home-run swing. The funds can post huge gains; the average emerging markets fund gained 72% last year. These funds also provide diversification because many of the smaller companies in these markets don't tend to rise and fall with U.S. stocks. That said, these funds invest in some fairly shaky markets. For instance, the average emerging markets fund finished the year down five times during the 1990s. Even after last year's steep gains -- coming on the heels of two down years -- these funds' returns don't compare well with the U.S. market, trailing the S&P 500 over the last one-, five-, and 10-year periods, according to Morningstar.| More Whiffs Than Home Runs The numbers tell the tale of how rough emerging markets have been over the past 10 years. | ||
| Avg. Emerging Markets Fund | S&P 500 | |
| YTD return | -26.3% | -4% |
| 1-year return | -3.4 | 3.7 |
| 5-year return | -0.6 | 21.1 |
| 10-year return | 5.7 | 19.2 |
| Source: Morningstar. Annualized performance figures through Nov. 1. | ||
| Leading Emerging Markets Funds These funds have topped their peers over one- and three-year periods. | ||
| Fund | 1-Year Return | 3-Year Annualized |
| (ODMAX Quote)Oppenheimer Developing Markets A | 24.8% | 12.4% |
| (FJEMX Quote)First American Emerging Mkts | 14.6 | -3.7 |
| (PRMSX Quote)T. Rowe Price Emerging Mkts | 12.1 | 4.5 |
| (ETEMX Quote)Eaton Vance Emerging Markets A | 12.1 | -2.1 |
| (GLEMX Quote)Glenmede Emerging Markets | 11.1 | 0.6 |
| (GBEMX Quote)Guardian Baillie Emerg Mkts | 10.8 | -0.1 |
| (SDMGX Quote)Sit Developing Markets Growth | 6.5 | 1.8 |
| (LMEMX Quote)Legg Mason Emerging Markets | 5.7 | 1.9 |
| (TWMIX Quote)American Century Emerg Mkts | 4.9 | 6.9 |
| (PRIAX Quote)Principal Intl Emerging Markets | 2.4 | 1.9 |
| Source: Morningstar. Annualized performance figures through Nov. 1. | ||
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