In a 10-part series, Advisor.ca looks at top performing funds in their categories over 10 years.  In the emerging markets category, AGF Emerging Fund comes out on top.  The fund has a 10 year return of 9.1% well above the benchmark MSCI Emerging Index return of 6.2%.  The manager, Patricia Perez-Coutts has been managing the fund since 2002.  Being born and studying in Peru and living in Brazil, she has deeply-rooted understanding of the developing Latin American market.  The fund currently has a 25.5% allocation to Latin America, a couple percentage points over the benchmark index.  One of the key themes in emerging markets is the rise in consumer spending, which is why AGF Emerging is also overweight in the consumer goods and services sectors.  Patricia says that consumer spending in emerging countries has still lots of room to grow. 

The article goes on to explain that, despite emerging markets being all the rage today, they weren’t always as popular.  Several emerging economies were marked by political and economic instability in the mid 90’s, but the harsh lessons learned from that period led to debt repayment at the government level and cleaner balance sheets at the corporate level.  Also, the low interest rate period of the early 2000’s led to widespread global spending, which led to rising commodity prices and resource rich countries like Brazil (and Canada!) benefited. 

You First Portfolios will typically have around a 10% weighting emerging market sector. The risk level for emerging market funds will usually be “high”, because returns tend to be more volatile than developed equity markets. 

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