“The key is identifying good managers who have an ability to add a lot of value, because emerging markets are not as efficient as certain large-cap developed markets are,” says Ristuben. “We believe there’s an opportunity to add value in active management, so at the end of the day we want managers who can differentiate emerging markets securities and identify winners from losers.”
Russell’s actively managed Emerging Markets Fund (REMSX), has returned 26.98 percent year-to-date, 25.59 percent 12-month annualized returns, but only 0.63 percent three-year annualized returns as of June 30, 2017. Since its January 1993 inception date, the fund has delivered a 6.4 percent average annualized return.
The mutual fund’s top holdings include Samsung Electronics, Tencent Holdings, Alibaba, Taiwan Semiconductor and HON HAI Precision industry. Since Russell’s strategists benchmark to MSCI’s Emerging Markets index, countries that others classify as developed markets, developing markets and BRICs are included in the strategy. For example, Russell’s strategies include South Korea, Brazil, Taiwan and Russia in their universe of potential investments.
“If you look at developed markets and compare Canada and the U.S. to Europe, the U.K. and Japan, they all look a lot alike; there’s homogeneity in the developed world,” says Ristuben. “The emerging markets are heterogeneous, they don’t look at all alike, and we believe that’s one of the reasons that they have so much potential.”
REMSX had $2.33 billion in assets through the first half of the year, and carries a 1.45 percent expense ratio.
Mutual funds in the same class as REMSX include IEMFX, T. Rowe Price’s Emerging Markets Equity fund, FKEMX, Fidelity’s Emerging Markets fund, and JEMSX, the J.P. Morgan Emerging Markets Equity fund.