Emerging markets managers maintain lower star ratings, says S&P
The majority of emerging market funds rated as part of the latest Standard & Poor's (S&P) sector review have maintained three stars due to their managers’ relative inexperience and short track records.
The latest S&P Fund Services emerging markets sector review covered funds across three peer groups: global emerging markets, Asia ex Japan, and China.
S&P affirmed ratings on most funds, although the Aberdeen Global Opportunities Fund was upgraded to four stars while the Amundi Global Emerging Markets Fund was downgraded to three stars. Schroders remains the only manager with a five-star rating.
S&P Fund Services analyst Simone Arblaster said a large proportion of the peer group had maintained three star ratings, which partly reflected the managers’ inexperience in investing in emerging markets and the relatively short track records of some.
“It is typically a volatile space in which to invest, meaning that experience and evidence of investing and managing risks in a consistent manner are important factors in gaining conviction in a manager,” she said.
S&P warned that emerging markets might not be suitable for all investors because, while funds expose investors to some of the strongest growing regions in the world, there is also a relatively high level of risk of losing capital over the short-to-medium term.
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