15 July Emerging Markets

GEM Funds: Performance & Attribution Review, Q2 2024

352 Global Emerging markets active equity funds, AUM $429bn

GEM Funds: Performance & Attribution Review, Q2 2024

Summary

  • Strong Q2 returns but passive beats Active: Average active fund returns of 3.91% fail to beat the iShares MSCI EM ETF return of 4.39%, with 54% of funds underperforming.

  • Growth beats Value: All Style groups underperform the benchmark on average, though Growth has the edge on Value over the quarter.

  • Key Overweights Drag on Returns: The consensus overweights of Brazil, Mexico and Indonesia proved costly, though Materials underweights, Saudi underweights and strong stock selection in South Korea stemmed relative losses.

  • Tencent and TSMC underweights costly: Both stocks are among the top underweights among active GEM investors. Strong performance this quarter contributed to underperformance.

  • Active vs Passive: Q2 underperformance detracts from a strong Q1, though active GEM funds remain ahead of the benchmark on the year so far.

For more analysis, data or information on active investor positioning in your market, please get in touch with me on steven.holden@copleyfundresearch.com