An Emerging Affair
Schroder's ISF GEM Opportunities Top Five Holdings
| Rank | |
|---|---|
| 1 | Kospi Index Warrants (South Korea) |
| 2 | Commercial Int'l Bank (Egypt) |
| 3 | Open Investments (Russia) |
| 4 | Brazil Telecom (Brazil) |
| 5 | N Plus Expressways (Malaysia) |
The Affair
The feature that differentiates Schroder’s ISF Global Emerging Market Opportunities fund from other GEM funds is that it is not benchmarked to an index.
Fundsupermart.com’s Mah thinks the advantage of this approach is that it narrows down the scope to only markets that meet Schroders’ framework criteria. These criteria may include good valuations or strong earnings growth. In this case, it concentrates the stock picking effort on markets that already seem healthy fundamentally.
Funds who simply follow benchmarks may have to actually invest in a number of markets even though the fundamentals in these markets may not seem attractive as they are confined to the benchmark. If benchmarked funds do not like certain markets they can only underweight the markets by a certain designated percentage, for example 5% (as stipulated in their objective).
However, Mah points out that investors should look closely at the criteria Schroders uses, which should be broad-based and complete, not overly focused on just value or growth. If the process were overly focused on growth or value, than the overall portfolio of stocks would tend to be less diversified.
Please send your questions and comments to us at fundaffair@cnbc.com. We will answer as many of your emails as possible on "CNBC's Cash Flow" airing on Monday, April 23, 10 a.m. to 12 noon Hong Kong/Singapore time.
