CAMRADATA, a leading provider of data and analysis for institutional investors, has published its latest investment research reports for Q2 2018 on Emerging Market Equity and Emerging Market Debt – which charts the performance of investments and asset managers.
Over three years’ worth of data from CAMRADATA Live (its online manager research platform) at 30 June 2018 was analysed to produce the reports and some key investments trends emerged for Q2.
In Q2, Emerging Markets suffered steep declines as investors swapped these “riskier” assets for safer ones such as treasuries. Assets in EME declined by $53 billion and in EMD declined by nearly $22 billion compared with the first quarter (largely the result of market losses).
According to Sean Thompson, Managing Director, CAMRADATA, there are several factors behind the falling asset values, including rate rises from US Federal Reserve, which are regarded as significant.
Sean Thompson says, “With yields on ten-year US government bonds now about 3%, investors have more of an incentive to sell their risky emerging market equities and buy safe treasuries. Higher US interest rates also tend to encourage investors to swap emerging market equities for American ones.
“But this could be an over-reaction, as we heard (13 September) at the CAMRADATA Emerging Markets Seminar, where one fund manager noted that in previous hiking cycles, emerging market equities went on to outperform. This is because growth potential favoured these markets – and this is the case now.
“Markets have also become jittery at the thought of more tariffs or retaliatory currency devaluation if the US and China trade war escalates. However, it appears many investors are anticipating a rally in emerging market equities and may consider the current trough as a good opportunity to buy. In fact one leading emerging market researcher described now as being the best entry point for emerging market assets in 16 years due to factors such as the dollar looking unstable, and there being – in his view – solid fundamentals in emerging markets that mean there is a complete absence of contagion risk.”
Thompson added: “The simple fact could be that emerging markets are always casualties of uncertainty. But Turkey and Argentina are not bellwethers for the sector. And nor should investors be overly worried about geo-politics. Fund managers note that emerging markets have survived many geo-political events in the past.”
Other key highlights include:
Emerging Market Equity
- Over the last quarter the EME universe saw positive inflows which totalled just over $4.9bn.
- In Q2 2018 just over 10.5% of managers achieved positive returns in the Emerging Market Equity universe. The lowest return produced is -11.57% and the best performing product achieved 12.07%.
- AGF Investments achieved the largest percentage growth in AuM seeing its assets increase by 129.11%, followed by DePrince, Race & Zollo Inc., Barings, TT International and Artemis Investment Management.
Emerging Market Debt
- Over the last quarter the EME universe saw outflows which totalled just over $3.3bn.
- Ashmore Group had the largest asset inflows totalling $1,219m during the quarter, followed by Wellington Management, Logan Circle Partners, Western Asset Management and Franklin Templeton Investments.
- Mirabaud achieved the largest percentage growth, seeing their assets increase by 29.46% during Q2 2018, followed by Western AM, Colchester Global Investors, Logan Circle Partners L.P. and Manulife.
Sean Thompson concluded, “Our investment reports are essential reading for keeping abreast of what is happening in the EME and EMD markets, providing detailed commentary and analysis on how the classes have recently performed, as well as historically over the past three years.’
CAMRADATA has also published separate Q2 2018 reports on Diversified Growth Funds, Global Equity, UK Equity and Multi Sector Fixed Income.
For more information or to receive any of the reports, please contact: [email protected]