Eaton Vance Emerging Markets Fund
|Tenure: Manager since |
May 1, 2000
|Assets: $18 million|
|Three-Year Average Annual Return: -5.69% (Top 13% of Peers)*|
|Top Three Holdings: Harmony Gold Mining (S. Africa), Gold Fields (S. Africa), Sindoricoh (S. Korea)**|
|Fund Information: |
|*Performance through 11/30/2002. **As of 9/30/2002. Source: Morningstar, Eaton Vance|
1. What is the outlook for emerging markets in the next 12 to 18 months? It's a mixed picture. Emerging markets obviously have significant dependence on the major markets. What we're seeing is that domestic markets are strong, but that exports to the U.S. and Europe are weak. We are more invested in domestic consumer-based stocks rather than export-driven businesses. Where we're positive and why we're very optimistic about emerging markets at the moment is on valuation grounds. I'm seeing many stocks with P/E ratios under 10 and dividend yields approaching 5%, which is almost always a good basis on which to invest. Why are valuations so low? The emerging markets went through a crisis in 1997-1998 and it was across the board -- Russia, the Far East, Latin America as well. Since then, there's been quite a lot of consolidation and reorganization, the banking systems have been reformed, credit has improved dramatically. We've seen extremely low levels of earnings bounce back surprisingly quickly. I wouldn't categorize it as fundamental growth, rather a rebound after a couple of years of extremely difficult trading. In a way, we're back on trend. That's one side of the equation. On the other side, there is domestic growth. Emerging markets have large consumer markets within them where the people are getting steadily richer -- a growing middle class, if you will.
When fund guru gross and market-beater Miller both sound rosy about stocks, it must be good.
The industry has a bone to pick with greater frequency of disclosure.