IM Hexam Global Emerging Markets (GB00B3CTJJ73) has been included in wealth adviser Bestinvest's Spot the Dog list of underperforming funds for the second time in a row, following a period of poor performance.
Bestinvest reports that this fund failed to beat the MSCI Emerging Markets Index over three consecutive 12-month periods, and also underperformed this index by 10 per cent or more over the three-year period of analysis, with a relative three-year return of -31 per cent. This would mean that if you had invested £100 in the fund over the three years to the end of 2012, you would have got back £80 from your original investment. This is a period during which the MSCI Emerging Markets index recorded a mid-teens gain.
Meanwhile, over one and three years, IM Hexam Global Emerging Markets is the poorest-performing fund in the Investment Management Association (IMA) Global Emerging Markets sector, and since launch in February 2009, the fund has returned 35.9 per cent against a sector average of 90.3 per cent.
However, its managers are more optimistic going ahead. In the fund's latest commentary, they say: "We continue to see a strong upside to portfolio holdings based both on macroeconomic fundamentals and stock-specific factors. We continue to look for new cyclical opportunities to ensure that the fund gains full benefit when the defensive cyclical reversion occurs and have been consistently adding to cyclical exposure via non-commodities. There are very few areas other than the ones we are in that exhibit a combination of growth at a reasonable price, low price momentum, liquidity and under-ownership."
Read our November 2011 interview with the fund's manager, Bryan Collings here.
Bestinvest says that Spot the Dog is not a list of funds that should be automatically sold. However, unless there are good reasons to believe performance will turn around, it may make sense to switch. Their pick of 'Best of Breed' funds in the Global Emerging Markets sector are IC Top 100 Fund First State Global Emerging Markets Leaders (GB0033873919), Aberdeen Emerging Markets (GB0033228197) and JPM Emerging Markets (GB0030881550).
