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AGF manager bids adieu with a stellar 10-year run for emerging markets fund

swon@globeandmail.com

What are we looking for?

How emerging market equity funds have fared over a decade.

Investing in the markets of developing countries has been appealing because of the fast-growing economies of countries such as China, India, Brazil and Russia.

The screen

We examined the returns of emerging markets funds for the 10 years ended March 31. U.S. dollar, segregated and duplicate versions of the funds were excluded, as well as investments that are a part of a portfolio of funds.

What did we find?

A gem in AGF Emerging Markets. And uncertainty as to whether this fund leader can continue its winning ways.

This emerging markets fund, which posted an annualized 11.1-per-cent return, has been run by Patricia Perez-Coutts of AGF Management Ltd. for the past decade.

The performance is remarkable given that the Toronto-based manager beat the MSCI Emerging Markets Free Index (in Canadian dollars). Her fund also outpaced the 6.8-per-cent annualized gain by Templeton Emerging Markets, an offering run by the high-profile, globetrotting Mark Mobius of Franklin Templeton Investments.

Still, investors in the AGF fund may be wondering what to do now that Ms. Perez-Coutts and four members of her team are jumping ship next month to run money for a newly created Canadian investment arm of Dallas-based Westwood Holdings Inc.

Stephen Way, leader of AGF's global equity team and who will take over her fund, plays down his predecessor's impending departure. "It's always been a strong team environment, and the process we follow is disciplined and repeatable," said Mr. Way, who also manages AGF Global Equity.

Like Ms. Perez-Coutts, he too uses a stock-screening process known as "economic value-added," or EVA, to find companies that can generate profits above their cost of capital.

It is not clear yet as to whether Ms. Perez-Coutts will run a rival mutual fund in addition to emerging markets strategies for institutional investors.

*****

HOW EMERGING MARKET EQUITY FUNDS HAVE FARED OVER THE PAST DECADE

Assetsto March 31, 2012Calendar year returns
FundMER(in $ mil.)10 years 5 years 20112010200920082007
AGF Emerging Markets3.061,669.9 11.10%4.45% -14.63%15.33%60.28%-35.25%12.43%
CIBC Emerging Markets Index1.36125.38.06%0.88%-16.82%10.48%42.30%-39.02%18.29%
Templeton Emerging Markets3.13201.06.82%-0.03%-19.89%13.34%51.66%-43.54%16.35%
Omega Emerging Markets2.92197.36.79%-0.35%-18.16%7.05%50.88%-44.62%19.77%
TD Emerging Markets2.88171.66.70%-2.39%-17.42%10.77%41.15%-47.16%19.60%
BMO Emerging Markets2.64120.76.14%-0.74%-20.19%17.79%46.80%-47.12%15.28%
Fidelity Emerging Markets-A2.6330.35.53%-3.48%-20.61%10.17%50.30%-50.93%20.63%
CI Emerging Markets2.73153.45.46%-1.04%-16.88%11.52%51.32%-45.63%16.46%
CIBC Emerging Markets3.0393.65.26%-0.65%-23.44%8.93%48.12%-33.50%5.93%
Renaissance Emerging Markets3.0515.14.76%-3.02%-22.94%9.63%46.16%-44.72%15.87%
HSBC Emerging Markets-I2.8514.22.98%-5.13%-26.71%6.19%43.85%-48.84%18.53%
S&P/TSX Total Return7.22%1.66%-8.71%17.61%35.06%-33.00%9.83%
MSCI Emerging Markets Free ($ Cdn)9.24%2.00%-16.15%12.98%52.03%-41.44%18.55%
Source: Globe Investor

© 2007 The Globe and Mail. All rights reserved.

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