Fidelity China Special is the best performing unit trust over three years according to analysis from Money Management. Its portfolio consists of equity holdings in China and Hong Kong, with a focus on the consumer discretionary, information technology and finance sectors.
The Money Management rankings, underpinned by Morningstar data, show the best performing funds of those with at least 75 per cent exposure to emerging markets.
While developed economies are struggling with plunging oil prices, low growth figures and deflation risks, emerging market countries seem to be a popular choice for most investors. With groups like Bric, Mint and others enjoying periods of popularity, it seems the age of acronym investing is here to stay.
But countries like India, Brazil, Indonesia, Turkey and South Africa - or the ‘Fragile Five’ as they were referred to last year - suffered a huge loss in their currencies after the U.S. Federal Reserve decided to start wrapping up its bond-buying programme. With markets anticipating a rate hike from the Fed later this year, the big question remains if the emerging markets will get impacted again or if a hike is already priced in?
A number of analysts have said it’s important to look at these countries individually especially because they have different situations both at home and externally. Some of the factors affecting investments in these countries include political instability, weak regulatory and institutional frameworks, as well as corporate governance.
“Politics arguably play a bigger role in the emerging markets universe than in the developed. Russia and Turkey can exemplify this right now. These markets normally trade on the oil price and global liquidity but politics can exacerbate the underlying trend,” said Marcus Svedberg, chief economist at East Capital.
