I in actual fact have confidence a friend who asked me about the performance of First Sentier FSSA Dividend Earnings towards the Emerging Market index.
FSSA Dividend Earnings is doubtless one of the main popular funds since I started investing in 2003.
Evaluating the performance of Dividend Earnings to an Emerging Market index is an apples-to-orange comparison.
That apart, right here is the annualized total returns:
| Fund/Index | 1M | 3M | 1Y | 3Y | 5Y |
| iShares MSCI Emerging Market IMI Index ETF (EIMI) | 8.4% | 8.7% | 17.7% | -0.7% | 4.2% |
| FSSA Dividend Earnings | 8.0% | 8.4% | -0.4% | -4.3% | 2.9% |
I adjust the EIMI, which is a USD denominated index, to have faith SGD appreciation over the assorted time classes.
EIMI is doing better than the FSSA Dividend Earnings.
But there will be no longer much surprises because of the we’re comparison a portfolio of Asia stocks towards Emerging market stocks.
Here is the residing allocation for First Sentier Dividend Earnings:
And right here’s EIMI:
The wonderful distinction is how much of South Korea, Brazil, Saudi Arabia and South Africa over Dividend Earnings’s allocation.
The funds are residing and die by their holdings.
We ought to silent snatch a seek recordsdata from at some longer timeframe performance, and a greater knowledge residing if we’re irregular about whether it is a accurate idea to swap to an rising market fund.
In the chart beneath, I collated the rolling 5-12 months annualized returns of the MSCI All Country Asia Pacific ex Japan index towards the MSCI Emerging Market index:
We have returns knowledge from 2001 to April 2024, which allowd us to mediate upon 221 irregular 5-12 months returns.
Any point on this chart is an annualized return so 39.9% is the annualized return while you delivery investing in Oct 2002 to Sep 2006.
You would perchance presumably perhaps also leer that the inexperienced line (Emerging markets) is continually above the crimson line (AC Asia Pacific ex Japan) while you invest earlier than 2008 and since then, the AC Asia Pacific ex Japan have confidence done better.
But no longer by much.
There are clear 5-12 months classes where the variation is main ample. The 5 12 months classes starting in Jan 2010 is one. If you are in MSCI Emerging markets, your annualized return will be -5.6% p.a. but while you are in AC Asia Pacific ex Japan, this might presumably be better at -1.5% p.a.
What can we learn from this? There are about a main international locations that create up a enormous composition of each Asia Pacific ex Japan and Emerging markets and so what will separate the performance is the performance of those international locations that is point to in a single and no longer in one more.
Brazil and South Africa will be about a of the main international locations.
I leave it to my friend to create his investment decision.
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