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Not All Emerging Market Funds Are Alike

This does not make EMIF a better fund than PXR. It simply has a different composition. If it is late now in the emerging-market cycle or if there is a reversion to the mean under way, then it is logical to think that more defensive parts of the market would outperform -- similar to beer and food stocks being more defensive late in the U.S. stock market cycle.

The bull case for the more mature end-user companies in emerging markets revolves around the idea that despite the cyclical ups and downs of portions of economies, the story on the ground is that more people are ascending to a middle-class lifestyle, driving cars they just bought and having electricity and water come into their homes.

If it is late in the cycle, that means the cycle will end and then after a time a new cycle will begin. When that happens it is likely the more cyclically sensitive PXR will be the one to outperform.

Again, this is not about one fund being better but about understanding what the differences in how funds are constructed will mean for fund holders.

At the time of publication EMIF was a client holding.

This article was written by an independent contributor, separate from TheStreet's regular news coverage.

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