Similar Names, Very Different Portfolios
Funds targeting the same country or region are not interchangeable.
Years ago, a friend who was an active investor heard good things about the prospects for Chile. He asked if I knew anything about a closed-end portfolio called Chile Fund (CH) (now Aberdeen Chile). I gave him a rundown of its portfolio, expenses, and other traits, some of them appealing, some less so. But those facts didn't hold much interest for him. It appeared that he wanted simply to confirm that the fund existed and was legitimate. The fund's details--necessary information for a fund analyst--were superfluous. If it invested in Chile, it fit the bill.
Although that seemed like a superficial approach, in retrospect he had a point: At that time there was nothing else to choose from. But with the explosion in single-country funds, many of them exchange-traded funds, an investor who now wants to target a specific emerging market (or region) likely has many options. That's especially true with larger markets, but choices are now available even for less-common destinations such as Chile. Often, such funds are far from interchangeable, making investigation critical.
Gregg Wolper does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.