Emerging markets have undoubtedly provided some amazing returns over the past few years, and investors are taking notice. Some of the most popular mutual funds now are the emerging market mutual funds. The astronomical returns are bringing new money in at amazingly high rates. Today I will take a look at what I believe to be the top five emerging market mutual funds for new investors to consider. These five are picked based on past performance, fees, and length of the current manager's time at the fund.
- Driehaus Emerging Market Growth (DREGX)- It's hard to deny this fund the top spot with its amazing past performance. It ranks in the top 5 of all emerging market funds in 5 year average annual return at 40.71%, and 2nd in 3 year average annual return at a whopping 43.45%. Emery Brewer has been at the helm of this fund since 1997, proving his skills at picking emerging market winners.
- DFA Emerging Markets Value I (DFEVX)- The number one rated fund in this category based on 5 year return, sitting at 44.4%. Since fund inception in 1998, Karen Umland has piloted this fund to terrific returns. The fund is also a great option because of its dirt cheap fees relative to its peers. The total expense ratio here is just 0.60%, compared to the average of 1.79%.
- Quant Emerging Markets Ord (QFFOX)- With a minimum initial investment of just $2,500 and a great long-term track record this fund looks like a great option. A 1% front end-load keeps it from ranking any higher on our list. This fund has been a very consistent outperformer of its peer group and is a good long-term holding.
- Eaton Vance Tax Managed Emg Markets I (EITEX) This one has a much higher minimum of $50,000, but is a great performer. It is a 5 star morningstar fund and has a five year average annual return of 40%. A new manager that just started last year keeps this fund from ranking higher.
- Oppenheimer Developing Markets Fund A (ODMAX)- A high front end-load of 5.75% keeps this fund from ranking higher, but long-term performance is second to none here. This fund was very successful in picking emerging market winners before the euphoria over emerging markets became so evident. By standing the test of time and being consistently great this fund ranks highly.
These are what I judge to be the top five emerging market mutual funds available to investors today. Please make sure that you do not put too high of a percentage of your portfolio in emerging market funds since these funds have risen so much and simply cannot continue to return the percentage they have in recent years. If you are putting your money in this sector, put it in there to get above average results, but don't expect 40% a year over 5 years like we have seen of late or you will be very disappointed.
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