Mutual Funds

What Are Emerging Market Funds : 7 Best Emerging Market Funds In India (2019)

  • Richa Sharma

Emerging markets are off to a solid start in 2019, with the benchmark MSCI Emerging Markets Index up 7% year-to-date, rebounding from 2018’s sell-off.

Even with the rise, market analysts say emerging markets remain cheap compared to the U.S. and given many investors have little exposure to these growing regions, now might be a good time to add core emerging markets mutual funds.

Let us look at everything on emerging markets funds to consider for the buy-and-hold investor.

What Are Emerging Market Funds?

Emerging market funds are the kind of mutual funds that invests the majority of its assets in stocks domiciled in nations classified as emerging or developing by one or more of the main indexing authorities.

These funds provide exposure to stocks in Asian, Latin American, African and European emerging markets of various market capitalizations. They can be indexed or actively managed by the fund houses.

These countries are in an emerging growth phase and offer high potential returns with higher risks than developed market countries.

Emerging market countries can be identified by market index providers and are defined by various characteristics prevailing to that country.

Europe, Middle East, and Africa Asia South America
Czech Republic China Brazil
Egypt India Chile
Greece Indonesia Colombia
Hungary Korea Mexico
Poland Malaysia Peru
Qatar Pakistan
Russia Philippines
South Africa Taiwan
Turkey Thailand
United Arab Emirates

The fund normally invests at least 80% of its total net assets in equity securities of companies with business activities in developing markets.

Its fund manager seeks to achieve its investment objective by investing in common stocks of emerging companies expected to grow at a faster rate than the world gross domestic product (GDP).

7 Best Emerging Market Funds

Here is the list of top 7 emerging market funds that you can consider investing in.

Funds At A Glance

7 best emerging market funds 2019
Fund Name 1Y 3Y 5Y Expense Ratio Turnover Ratio Category Risk
Edelweiss Emerging Markets Opportunities Equity Offshore Fund Direct Growth 2.69% 8.48% 3.86% 0.17% NA Others
(FoF Overseas)
High
HSBC Global Emerging Markets Direct Plan Growth -4.16% 5.75% 2.45% 1.66% 2% Others
(FoF Overseas)
High
PGIM India Global Equity Opportunities Fund Direct Growth 11.31% 11.16% 3.72% 0.67% NA Others
(FoF Overseas)
High
Kotak Global Emerging Market Fund Direct Growth -5.05% 4.18% 1.37% 0.69% NA Others
(FoF Overseas)
High
Edelweiss Greater China Equity Off shore Fund Direct Growth 6.64% 11.42% 8.55% 0.54% NA Others
(FoF Overseas)
High
HSBC Brazil Direct Plan Growth 24.13% 10.2% -0.27% 1.64% NA Others
(FoF Overseas)
High
Principal Global Opportunities Fund Direct Growth -7.39% 7.77% 3.96% 0.91% NA Others
(FoF Overseas)
High

1. Edelweiss Emerging Markets Opportunities Equity Offshore Fund

This Emerging market fund launched on January 02, 2013. It is a fund with high risk and has given a return of 4.80% since its launch.

Returns per annum over the years from this fund are :

Duration Returns
1 year  7.40%
3 years  12.11%
5 years   5.01%

Key information of this fund:

Launch Date 02 January 2013
Fund Category Equity – Emerging Market
Plan Type Direct
Rating by Groww 2 Star
AUM (Fund Size) Rs. 7 Cr
Riskometer High
Minimum SIP Rs. 500
Minimum SWP Rs. 500
Benchmark MSCI Emerging Markets
Age of the fund 6 years old
Expense Ratio 0.17%
Exit Load If redeemed within 1 Year; Exit Load is 1%;
Type  Open-ended

The primary investment objective of this fund is to seek to provide long term capital growth by investing predominantly in JPMorgan Funds – Emerging Markets Opportunities Fund, an equity fund which invests primarily in an aggressively managed portfolio of emerging market companies.

This fund may also invest a part of its corpus in money market instruments and/or units of liquid schemes to meet liquidity requirements from time to time.

Also, the fund does not guarantee/indicate any assured returns.

This is the best performing emerging market fund available in the market right now with the least expense ratio.

Read more: Is it a Good Time to Invest in Manufacturing Stocks? Which One’s Can You Consider?

2. HSBC Global Emerging Markets Direct Plan-Growth

This Emerging market fund launched on January 02, 2013. It is a fund with high risk and has given a return of 7.48% since its launch.

Returns per annum over the years from this fund are :

Duration Returns
1 year  – 2.0%
3 years  10.2%
5 years   4.2%

Key information of this fund:

Launch Date 02 January 2013
Fund Category Equity – Emerging Market
Plan Type Direct
Rating by Groww 1 Star
AUM (Fund Size) Rs. 9 Cr
Riskometer High
Minimum SIP Rs. 1000
Minimum SWP Rs. 1000
Benchmark MSCI Emerging Markets
Age of the fund 6 years old
Expense Ratio 1.66%
Exit Load If redeemed within 1 Year; Exit Load is 1%;
Type  Open-ended

The investment objective of the fund is to provide long term capital appreciation by investing in India and in the emerging markets, in the equity and equity-related instruments, share classes and units/securities issued by overseas mutual funds or unit trusts. The fund may also invest a limited proportion of debt and money market instruments.

However, it has not succeeded in outperforming its benchmark over the last 1 year but over 3 years it has shown good returns.

Read more: 9 Agricultural Sector Stocks That Can Do Wonders to Your Portfolio

3. DHFL Pramerica Global Equity Opportunities Fund Direct-Growth

This international fund launched on January 8, 2013. It is a fund with high risk and has given a return of 5.32% since its launch.

Returns per annum over the years from this fund are :

Duration Returns
1 year  18.77%
3 years  13.20%
5 years  4.29%

Key information of this fund:

Launch Date 08 January 2013
Fund Category Equity – International
Plan Type Direct
Rating by Groww 1 Star
AUM (Fund Size) Rs. 18 Cr
Riskometer High
Minimum SIP Rs. 500
Minimum SWP Rs. 100
Benchmark MSCI All Country World TRI
Age of the fund 6 years old
Expense Ratio 0.67%
Exit Load If redeemed within 1 year; Exit Load is 1%;
Type  Open-ended

The investment objective of the fund is to generate long-term capital growth by investing predominantly in units of overseas mutual funds, focusing on agriculture and/or would be direct and indirect beneficiaries of the anticipated growth in the agriculture and/or affiliated/allied sectors.

But remember, there can be no assurance that the investment objective of the Scheme will be realized.

In the past 3 years, this fund has performed tremendously well as compared to its peers. But if we look into its 5-year performance, it is much below its peers and benchmark.

Read more: Check Out the 10 Best Performing Stocks in 15 Years

4. Kotak Global Emerging Market Fund Direct-Growth

This Emerging market fund launched on January 04, 2013. It is a fund with high risk and has given a return of 4.47% since its launch.

Returns per annum over the years from this fund are :

Duration Returns
1 year  – 2.33%
3 years   8.13%
5 years   2.43%

Key information of this fund:

Launch Date 04 January 2013
Fund Category Equity – Emerging Market
Plan Type Direct
Rating by Groww 1 Star
AUM (Fund Size) Rs. 33 Cr
Riskometer High
Minimum SIP Rs. 1000
Minimum SWP Rs. 1000
Benchmark MSCI Emerging Markets
Age of the fund 6 years old
Expense Ratio 0.69%
Exit Load If redeemed within 1 Year; Exit Load is 1%;
Type  Open-ended

The investment objective of this fund is to provide long-term capital appreciation by investing in an overseas mutual fund scheme that invests in a diversified portfolio of securities as prescribed by SEBI from time to time in global emerging markets.

Read more: 10 IT Sector Stocks You Can Bet On in 2019

5. Edelweiss Greater China Equity Off-shore Fund Direct-Growth

This Emerging market fund launched on January 02, 2013. It is a fund with high risk and has given a return of 11.62% since its launch.

Returns per annum over the years from this fund are :

Duration Returns
1 year  1.89%
3 years  14.15%
5 years   9.51%

Key information of this fund:

Launch Date 02 January 2013
Fund Category Equity – Emerging Market
Plan Type Direct
Rating by Groww 2 Star
AUM (Fund Size) Rs. 92 Cr
Riskometer High
Minimum SIP Rs. 1000
Minimum SWP Rs. 500
Benchmark MSCI Golden Dragon
Age of the fund 6 years old
Expense Ratio 0.54%
Exit Load If redeemed within 1 Year; Exit Load is 1%;
Type  Open-ended

The primary investment objective of this fund is to provide long term capital appreciation by investing in JPMorgan Funds – JF Greater China Equity Fund , an equity fund which invests primarily in a diversified portfolio of companies incorporated or which have their registered office located in, or derive the predominant part of their economic activity from, a country in the Greater China region.

Read more: 10 Best Mid-Cap Stocks You Can Consider Investing for Long Term

6. HSBC Brazil Direct Plan-Growth

This Emerging market fund launched on January 02, 2013. It is a fund with high risk and has given a return of 10.54% since its launch.

Returns per annum over the years from this fund are :

Duration Returns
1 year  26.93%
3 years  13.31%
5 years   0.26%

Key information of this fund:

Launch Date 02 January 2013
Fund Category Equity – Emerging Market
Plan Type Direct
Rating by Groww 1 Star
AUM (Fund Size) Rs. 28 Cr
Riskometer High
Minimum SIP Rs. 500
Minimum SWP Rs. 1000
Benchmark MSCI Brazil 10/40 TRI
Age of the fund 6 years old
Expense Ratio 1.64%
Exit Load If redeemed within 1 Year; Exit Load is 1%;
Type  Open-ended

The primary investment objective of this fund is to provide long term capital appreciation by investing predominantly in units/shares of HSBC Global Investments Funds (HGIF) Brazil Equity Fund.

This fund may, at the discretion of the Investment Manager, also invest in the units of other similar overseas mutual fund schemes, which may constitute a significant part of its corpus.

Also, the fund invests a certain proportion of its corpus in money market instruments and/or units of liquid mutual fund schemes, in order to meet liquidity requirements from time to time.

Read more: 5 Most Popular International Mutual Funds To Invest In 2019

7. Principal Global Opportunities Fund Direct-Growth

This Emerging market fund launched on January 02, 2013. It is a fund with high risk and has given a return of 4.73% since its launch.

Returns per annum over the years from this fund are :

Duration Returns
1 year  – 5.31%
3 years  10.19%
5 years   4.91%

Key information of this fund:

Launch Date 02 January 2013
Fund Category Equity – Emerging Market
Plan Type Direct
Rating by Groww 1 Star
AUM (Fund Size) Rs. 16 Cr
Riskometer High
Minimum SIP Rs. 1000
Minimum SWP Rs. 1000
Benchmark MSCI ACW Small Cap Index
Age of the fund 6 years old
Expense Ratio 1.91%
Exit Load If redeemed within 1 Year; Exit Load is 1%;
Type  Open-ended

The investment objective of this scheme is to build a high-quality International Equity portfolio out of the Permissible Investments as defined and permitted under the regulations from time to time, and provide returns and/or capital appreciation along with regular liquidity to the investors.

Read more: The Best Stocks to Invest Under Rs. 20 (2019)

Should You Invest In Emerging Markets?

Emerging markets have been one of the hottest investment areas since the early 2000s, with new mutual funds and new ways to invest popping up all the time.

While there is no doubt that huge gains await investors that can find the right emerging market investment at the right time, the risks involved are sometimes understated.

These funds offer the benefit from diversifying into a different currency. Rupee depreciation enhances the returns from investments made in foreign markets

Read more: 5 reasons why FD investors should switch to stocks

Most of the people invest in emerging market funds because the rewards can far outweigh the risks if some basic caution is exercised.

This type of mutual fund is best suited for long-term growth investors with long-term investment horizons seeking capital appreciation by investing in a portfolio of equity securities in developing and emerging market economies.

Conclusion

So, emerging markets funds, no doubt, are risky, but the rewards they can create make them a worthy addition to any portfolio. The challenge for investors is to find ways to cash in on the growth without taking on an unreasonable amount of risk.

Happy Investing!

Disclaimer: The views expressed in this post are that of the author and not those of Groww

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