From MoneyWeek · · 1m 20s
Two Funds for Emerging Markets
Two funds offer balanced emerging markets exposure without tech overhang.
In brief
Two funds offer balanced emerging markets exposure without tech overhang. Utilico Emerging Markets and Mobius Investment Trust provide diversified emerging markets exposure with less tech focus than the MSCI index. Originally reported by MoneyWeek.
Emerging Markets Index Distorted
The MSCI Emerging Markets index is distorted by tech giants accounting for almost 30% of its value.
Tech Dominance in Index
Taiwan and South Korea make up nearly half the index, with Asia totaling 80% and tech representing 44%.
Strong Tech Returns
Tech stocks have returned 90%, 238% and 422% over the last year.
Utilico Emerging Markets Fund
Utilico Emerging Markets invests in infrastructure, utilities and related assets with no tech exposure.
Geographic Balance of UEM
Brazil is 22%, other Latin America 17%, and Eastern Europe (including Greece) 9.5% in the Utilico fund.
Underweight China in UEM
UEM has only 9% exposure to China, mostly in Hong Kong, versus 20% in the MSCI index.
China Regulatory Challenges
Co-manager Charles Jillings says China regulations can change overnight, making it difficult to invest.
“We find China very difficult, as regulations can change overnight”
Mobius Investment Trust
Mobius Investment Trust focuses on dynamic small and mid-sized companies with minimal overlap with the MSCI index.
China Underweight in MMIT
Mobius has less than 3% exposure to China, resulting in 22% underperformance last year but 12% outperformance this year.
The big picture
Utilico Emerging Markets and Mobius Investment Trust provide diversified emerging markets exposure with less tech focus than the MSCI index.
