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BRIC funds lead emerging market gains

swon@globeandmail.com

WHAT ARE WE LOOKING FOR?

How emerging market funds are faring this year. These investments got creamed last year as many investors dumped riskier stocks in developing countries during the global market meltdown.

TODAY'S SEARCH

We checked the year-to-date returns of emerging market funds to this Thursday, and to the end of April. We also looked at the annual returns last year to see how much red ink these funds shed. Duplicate and U.S. dollar funds were excluded.

WHAT DID WE FIND?

Among the top-five performers this year, three were BRIC funds - those investing only in the emerging economies of Brazil, Russia, India and China.

Brandes Emerging Markets Equity, a deep-value all-capitalization fund, rose to the top of the heap with a 25.2-per-cent jump. It has 20 per cent invested in large-capitalization stocks, and 40 per cent in both small- and mid-cap names.

"Since the March 6 lows, a lot of the small- and mid-cap value names have rebounded substantially," said Matt Brundage, assistant vice-president of product management at Brandes Investment Partners.

Asian auto makers such as Hyundai Motor Co., Proton Holdings Berhad, China Motor Corp. and Brilliance China Automotive Holdings Ltd. have been big winners for the fund. (The latter two were sold in the first quarter.) These firms sell inexpensive fuel-efficient cars, and have benefited from government subsidies to consumers for small cars, Mr. Brundage said.

Claymore BRIC ETF, which is invested in American depositary receipts (ADRs) listed in New York, gained 24.2 per cent.

The ETF is 50 per cent invested in Brazil, 38 per cent in China, 8 per cent in India and 4 per cent in Russia. Some of the biggest drivers of this fund have been the ADRs of stocks such as Petroleo Brasileiro, Companhia Vale do Rio Doce and China Mobile Ltd. "Brazil and China are better positioned for growth when the world economy turns around," said Vlad Tasevski, analyst at Claymore Investments Inc. China reported GDP growth of 6.1 per cent in the first quarter.

Templeton BRIC fund is run by veteran manager Mark Mobius, who expects BRIC countries to continue to be among the fastest-growing economies in the world.

"The Chinese economy is expected to grow 7 to 8 per cent in 2009," he wrote. "Brazil and Russia are resource-rich countries. Although there has been a recent fall in commodity prices, the longer trend ... is up, and these countries are likely to benefit from global demand for oil, steel, aluminum, pulp and other commodities."

How emerging markets funds are faring this year

May 14Apr. 30
(As of Apr '09)LatestYTDYTDAnnual % returns
Fund nameAssets ($-mil)MER%rtn%rtn2008200720062005200420032002
Brandes Emerging Markets Equity95.92.5725.2%16.3%-35.7%-1.0%27.4%15.5%20.0%30.1%
Claymore BRIC ETF24.2%15.8%-57.6%70.9%
Tmpltn BRIC CC-F220.42.9424.1%16.9%-48.5%37.2%52.4%6.2%
HSBC BRIC Equity-I70.92.7523.5%17.1%-48.6%
Russell Emerging Mkt Eq Pool-A22.8%17.0%-47.2%12.8%27.1%27.0%18.7%29.7%-10.2%
Pro FTSE RAFI EM Index-A19.6%16.5%-39.0%
Desjardins Fn Pl DGAM Emerging Mkts5.81.1518.3%13.0%-42.2%
Manulife Emerging Markets Fund7.52.917.5%13.4%-43.9%
Trans IMS Can-Emerge1.74.3217.3%11.4%-55.5%23.5%24.4%27.4%14.6%21.0%-7.5%
AGF Emerging Markets532.92.8517.3%12.4%-35.2%12.4%40.4%35.3%16.6%29.2%-19.2%
United Emerging Markets Pool-W600.2317.3%12.8%-44.0%19.2%33.6%
Tmpltn Emerging Markets200.42.9417.1%12.9%-43.5%16.4%25.0%23.3%14.6%24.4%-2.3%
CI Emerging Markets1312.5916.9%12.4%-45.6%16.5%34.1%26.7%4.7%22.8%-14.6%
CIBC Emerging Markets72.92.916.9%10.5%-33.5%5.9%25.8%20.7%16.1%27.8%-15.4%
National Bank Emerging Markets115.82.8516.6%12.8%-44.6%19.8%37.2%24.9%11.1%30.9%-13.3%
Altamira Global Discovery233.2416.4%12.6%-46.1%18.8%36.7%26.2%11.3%40.9%-12.9%
SEI Emerging Market Equity-O136.80.216.0%11.0%-41.0%15.0%29.3%27.4%20.8%27.9%-1.0%
HSBC Emerging Markets-I12.82.6715.8%11.3%-48.8%18.5%27.3%26.2%7.8%26.5%-13.9%
CIBC Emerging Markets Index951.2715.5%10.3%-39.0%18.3%31.8%30.2%14.8%29.0%-9.6%
Mackenzie Cundill Em Mkts Val Cl-A125.82.7714.5%6.9%-64.8%
Mackenzie Univ Emerg Markets Class95.22.4814.4%10.3%-40.4%14.4%32.9%34.9%9.2%21.3%
Desjardins Emerging Markets-A222.8414.1%8.7%-30.2%
GWL Emerging Markets (M) NL11.53.414.0%10.0%-40.9%13.3%31.9%33.7%8.3%20.4%-17.8%
Renaissance Emerging Markets14.42.913.6%8.6%-44.7%15.9%24.5%29.7%14.3%25.1%-12.0%
BMO Emerging Markets95.92.5313.6%9.8%-47.1%15.3%26.9%25.6%15.1%24.3%-9.3%
Fidelity Emerging Markets-A27.13.0613.0%8.4%-50.9%20.6%31.8%38.4%12.1%21.7%-10.2%
BMO GDN Emerging Mkts Mutual14.62.7512.0%9.8%-43.4%10.2%29.2%34.2%15.1%26.6%-6.1%
TD Emerging Markets165.72.7310.1%7.7%-47.2%19.6%37.6%29.9%14.7%28.6%-8.9%
MSCI Emerging Markets Free ($ Cdn)13.4%-41.4%18.5%32.1%31.2%16.8%27.8%-7.0%
MSCI World ($ Cdn)-4.2%-26.1%-7.1%20.6%6.6%7.3%9.4%-20.2%

SOURCE: GLOBE INVESTOR

© 2007 The Globe and Mail. All rights reserved.

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