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NUMBER CRUNCHER

Offshore equity funds: 15 top performers over a decade Add to ...

What are we looking for?

Markets around the world have experienced waves of volatility in the last three to six months, shaken by lower growth estimates in some regions and concerns over stimulus tapering by the U.S. Federal Reserve. We look for the top long-term performers in emerging and developed markets beyond this continent.

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We searched for the top 15 annualized returns in both emerging market and international equity funds for the 10 years ended Aug. 31, 2013. U.S. dollar, segregated and duplicate versions were excluded, as well as those closed to new investors or with minimum investments over $25,000.

What did we find?

Investing in emerging economies proves a winning formula over the last decade.

The AGF Emerging Markets Fund posted gains of 11.4 per cent in the 10-year period.

The long-term success of the fund has been driven in part by opportunities AGF has seen in sectors tied to growing consumer affluence, said Stephen Way, senior vice-president at AGF Investments Inc. and a portfolio manager on several global and emerging market funds.

“As people’s income levels in those markets rise and they become wealthier, they spend more money on consumer staples and discretionary goods,” he said.

AGF’s fund owns shares in retailers and consumer goods companies in Brazil, South Africa, Turkey and Asia, for example.

The fund continues to look for investments in these sectors today, but it tends to steer away from cyclical or volatile areas of the market such as commodities and utilities.

Investing in emerging markets is a good way to diversify a portfolio, Mr. Way said, but he noted that growth has disappointed in the last couple of years. “We’ve had downward revisions to both economic growth forecasts and earnings growth forecasts over at least the last two years,” he said. Since that trend is persisting, and some countries’ currencies are under pressure, the fund has been more cautious about investing in places such as India, Thailand and Indonesia.

While the sentiment toward emerging markets is negative now, there may be undervalued investments and long-term growth potential for those who know where to look. “We think the positive demographic profile in some of these countries is really compelling,” Mr. Way said.

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International and emerging market equity funds, 10 years to Aug. 31

Fund 1-yr
% rtn
(Aug. 31)
5-yr
% rtn
(Aug. 31)
10-yr
% rtn
(Aug. 31)
AGF Emerging Markets -1.3% 3.0% 11.4%
Brandes Emerging Markets Equity 9.8% 4.5% 8.4%
CIBC Emerging Markets Index A 5.2% -0.1% 8.3%
Investors International Small Cap Cl Srs A 29.2% 5.7% 7.6%
TD Emerging Markets 7.5% -0.5% 7.6%
Mackenzie Emerging Markets Class - A 2.8% -0.3% 7.4%
Signature Emerging Markets 9.1% -1.0% 7.0%
Russell Emerging Market Equity Pool-A 7.3% -0.7% 7.0%
IG Mackenzie Emerging Market Class-A 2.5% -0.3% 7.0%
Mawer International Equity Class A 21.3% 4.5% 6.9%

Source: Lipper

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