Which Are The Top Diversified Emerging Market Mutual Funds?

Oct 22, 2023 By Triston Martin

Developing markets risk, stock market risk, nation risk, regional risk, currency risk, political risk, and in diversified instances, active management risk and indexing risk, are included among the hazards that are inherently associated with diversified mutual funds that invest in emerging markets. Mutual funds that invest in developing markets often provide investors with the opportunity for greater potential returns throughout a longer period. This is done to compensate for the emerging markets' high level of risk and volatility.


Emerging Markets Stocks


They focus mostly on purchasing common stocks issued by corporations with headquarters located in developing nations such as China, Brazil, Russia, and India. The funds could also put their money into debt instruments or bonds issued by the respective nations' governments, government agencies, or companies headquartered there.


New World Fund Offered By American Funds (NEWFX)


The primary focus of the investments made by the American Funds New World Fund Class (NEWFX) is in the common stocks of firms headquartered in countries considered emerging markets. The fund's objective is to deliver long-term capital appreciation. The expenditure ratio that NEWFX utilizes is 1% of total revenue.


Under typical conditions, at least 35 percent of NEWFX's total net assets are invested in equity and debt securities of issuers predominantly headquartered in countries that the fund's advisor considers emerging market economies. These issuers may be domestic or international. As of the first quarter of 2021, 21.7 percent of NEWFX's portfolio is invested in the United States, 14.6 percent is invested in China, 6.4 percent is invested in Brazil, 7.0 percent is invested in India, 5.4 percent is invested in Japan, and 5.0 percent is invested in France. The stocks in the information technology sector have the biggest weight of any sector, accounting for 16.9 percent of the portfolio. This is followed by the companies in the consumer discretionary sector, the financial sector, and the healthcare sector.



Vanguard Emerging Markets Stock Index Fund (VEMAX)


On May 4, 1994, Vanguard started trading the Vanguard Emerging Markets Stock Index Fund, abbreviated as VEMAX. Those interested in investing must first put up a minimum of $3,000. VEMAX, much like the majority of funds offered by Vanguard, has a relatively low-cost ratio, which is only 0.14 percent. The Vanguard Equity Investment Group manages the fund, and the fund's goal is to provide investment outcomes comparable to the FTSE Emerging Markets Index, which serves as the fund's benchmark index.


VEMAX uses an indexing approach to realize its desired return on investment as quickly as possible. The fund invests about 95% of its total net assets in common stocks of firms included in the FTSE Emerging Market Index when market conditions are considered normal. As of the first quarter of 2021, VEMAX's total net assets surpassed 81 billion dollars.


T. Rowe Price's Emerging Markets Stock Fund (PRMSX)


The fund was first issued on March 31, 1995. T. Rowe Price Associates, Inc. advises PRMSX, and T. Rowe Price International Ltd. is responsible for providing PRMSX with further advice. The fund has an expense ratio of 1.21 percent each year, which it charges investors. At least eighty percent of PRMSX's total net assets are placed in the common stocks of emerging market firms when market circumstances are considered normal. The fund employs a growth strategy and chooses firms to invest in based on their potential to maintain long-term growth in profits, cash flows, and book values. PRMSX reported a total net asset value of $13.3 billion as of the first quarter of 2021.


Oppenheimer Developing Markets Fund Class A Fund (ODMAX)


This was a mutual fund investment. OFI Global Asset Management, Inc. serves as the fund's primary advisor, while Oppenheimer Funds, Inc. serves as a sub-advisor. The yearly net cost ratio for this portfolio is 1.22 percent, and there is a minimum investment amount of $100 that investors are required to put in mutual funds. The stocks in the information technology sector have the biggest weight of any sector, accounting for 16.9 percent of the portfolio. This is followed by the companies in the consumer discretionary sector, the financial sector, and the healthcare sector.


The fund's portfolio assets were $52.3 billion at the beginning of the first quarter of 2021. A more than twenty-five percent portion of the portfolio is comprised of stocks from China. The following three countries with the greatest holdings are Russia (9.4 percent), Mexico (7.4 percent), and India (10.8 percent). When broken down into their respective industries, consumer discretionary and financial stocks comprise more than half of the portfolio's total holdings.


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