Active GEM Funds Blitz Passive in 2019

Taken from our Global Emerging Markets quarterly research, we analyse the short and long-term performance of active EM funds versus the passive equivalent (in our case, we use the best tradeable representation of the benchmark, the I-Shares MSCI Emerging Markets ETF [EEM-US]). Our analysis shows EM active managers achieving their 3rd successive quarter of outperformance this year. This surmounts to an average outperformance of +3.65% in 2019, with 77% of active managers outperforming the benchmark. Over the longer-term, active GEM managers have outperformed the I-Shares MSCI Emerging Markets ETF in 11 of the last 15 years (including ytd 2019).


Our analysis also categorises funds based on their levels of independence from the benchmark portfolio. It shows that long-term outperformance is best achieved through a highly active approach, with low active, or closet trackers dragging down the long-term returns of the asset class.


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Steven Holden