Portfolio Manager Perspectives

Jeff Benjamin

Suddenly, scores of emerging-market funds are emerging

Calvert latest to launch cross-border offering; 547 funds available — and counting

Nov 5, 2012 @ 1:39 pm

By Jeff Benjamin

Calvert Investments has jumped on the emerging-markets bandwagon with the help of U.K.-based Hermes Fund Managers Ltd.

Launched Oct. 31, the Calvert Emerging Markets Equity Fund Ticker:(CVMAX), will apply socially conscious investing screens to a concentrated portfolio that will be subadvised by Hermes portfolio manager Gary Greenberg.

Hermes, which has $40 billion under management, manages $800 million in the emerging-markets category.

The new fund joins one of the fastest-growing and better-performing categories in recent years. According to Morningstar Inc., there have been more than a dozen diversified emerging- market funds launched already this year, bringing the category total to 547.

That is up from 356 at the end of 2008.

The fund category got a big boost in 2009 when it generated an average gain of almost 74%. Since then, the category was up 19.3% in 2010, down 19.9% in 2011, and has gained 11.6% so far this year.

By comparison, the S&P 500 gained 26.5% in 2009, 15.1% in 2010, 2.1% last year, and has gained 14.5% so far this year.

On the issue of a crowded marketplace, Mr. Greenberg countered that the flood of money and funds into the emerging-markets space is all the more reason for allocating to a more concentrated portfolio.

The Calvert portfolio of fewer than 50 stocks is currently most heavily weighted in China and Korea, but also has exposure to Russia, India, Nigeria and South America.

“Deep structural changes under way in the global economy are creating inefficiencies in emerging markets, as many local and retail investors lack the tools to adequately discount rapid social, political and economic developments,” Mr. Greenberg said. “The volatility caused by these changes means that, at times, quality companies in countries with conditions that are supportive to growth will trade at very attractive valuations, allowing us to profit from temporary bouts of adverse market sentiment.”

As a subadvisor, the Hermes team sends portfolio selections to Calvert where the various social and environmental screens are applied.

“We see a growing opportunity in emerging markets,” said Natalie Trunow, Calvert chief investment officer.

“Emerging markets remain the fastest-growing segment of the global economy, responsible for 85% of all global growth since the beginning of 2008,” she added. “While the pace has slowed, the estimated ranges of growth rates are still significantly greater than the estimated range of [gross domestic product] growth rates in developed countries.”

Portfolio Manager Perspectives are regular interviews with some of the most respected and influential fund managers in the investment industry. For more information, please visit InvestmentNews.com/pmperspectives.

0
Comments

What do you think?

View comments

Recommended for you

Featured video

Events

Why blockchain matters to financial advisers

Lex Sokolin, a futurist and entrepreneur focused on the next generation of financial services, explains why every financial adviser should pay attention to blockchain and so-called cryptocurrencies.

Latest news & opinion

Nontraded REITs to post worst sales since 2002

The industry is on track to raise just $4.4 billion, well off the $19.6 billion it raised just four years ago, as new regulations hinder sales.

Broker protocol for recruiting a boon for clients

New research finds advisers whose firms have joined the agreement take better care of customers.

Meet our 2017 Women to Watch

Introducing 20 female financial advisers and industry executives who are distinguished leaders, advancing the business of providing advice through their creativity and hard work.

Raymond James executives call on industry to keep broker protocol

Also ask firms to pay for the administration of the protocol to 'ensure its longevity and relevance.'

Senate committee approves tax plan but full passage not assured

Several Republican senators expressed reservations about the bill, and the GOP cannot afford too many defections.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print