Attention Emerging-Markets Stock-Fund Shoppers
With the category one of the few losers so far this year, now might be just the time to consider one of these highly rated offerings.
An otherwise good year for equities hasn't been so rosy for emerging-markets stocks. Led by fears of slowing economic growth in China, but also dragged down by lackluster returns in India and Latin America, emerging-markets stock funds have been among the few equity losers of 2013. As of July 29, the diversified emerging-markets stock category had lost 6% year to date. Meanwhile, China-region funds had dropped 2%, with the India and Latin America equity-fund categories each losing about 15%.
Despite a rough first half of 2013, diversified emerging-markets stock funds were up about 5% during the 12-month period leading up to July 29--nothing to write home about, but not horrible. But with the S&P 500 up 24% during that time, emerging-markets stock funds--which tend to be more volatile than their developed-markets counterparts--look like laggards by comparison. It's the continuation of a story that's been going on for a few years now, with the category modestly outperforming the index in 2010 and 2012 but experiencing steep losses in 2011, producing a three-year annualized return of a measly 1.2%. (Morningstar's John Rekenthaler notes in this recent column that despite the lackluster performance of emerging-markets stocks, investors have poured $140 billion into traditional mutual funds and ETFs investing in them during the past three years.)
Adam Zoll has a position in the following securities mentioned above: PRMSX. Find out about Morningstar’s editorial policies.
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