Emerging markets continue to see new highs and more flows. For investors looking for further diversification and to take a step away from a crowded market, small-and-mid cap funds offer a way to tap into potentially fast-growing companies in the early stages of their development.
In this analysis, Citywire Americas takes a look at the best performing managers in the Equity - Global Emerging Markets Smaller Companies sector over the past three years.
Of the 29 fund managers Citywire tracks in this category, the average manager has outperformed the MSCI EM Small Cap TR’s return of 5.8%, returning 11.8% over a three year period ending in August 2017.
We’ve highlighted the top three performing fund managers below.
3. Antti Raappana- Danske Capital
Three- year manager total return: 13.6%
Kicking off our top three is Danske Capital’s head of global emerging market solutions, Citywire + rated Antti Raappana.
Raappana manages two funds in Citywire’s Emering Market Smaller Companies sector, the $177.4 million Danske SICAV-SIF Emerging and Frontier Small and Mid Cap and the $100 million DI Sicav Emerging and Frontier Markets IC EUR.
The former’s strategy is a mix of stock picking and a multimanager structure where Raappana selects regional or country specific advisors that build high conviction portfolios.
Finland-based Raappana, who has 16 years’ experience, controls the fund’s overall allocation between regions and manages the total portfolio. Currently he has allocated half of the fund to Asia, 14% to Europe and 13.75% to Latin America in his Small and Mid Cap portfolio.
2. Matthew Dobbs, Richard Sennitt and James Gotto- Schroders Investment Management
Three-year manager total return: 18.3%
The second best performing team consists of trio Matthew Dobbs, Richard Sennitt and James Gotto, with Dobbs and Sennitt Citywire + rated while Gotta holds a Citywire A rating.
The trio seems to be betting on the growing consumption of the middle class in Asia, which makes up nearly 70% of its regional allocation. Their top overweight is multi-brand hotel brand China Lodging Group. Another top holding includes Mando Corporation, a South Korean automobile company.
The three have been managing the $93 million Schroder ISF Global EM Smaller Companies fund together since its launch in January 2014. They were joined by manager Tom Wilson in August 2016.
1. Amit Mehta- JP Morgan Asset Management
Three-year manager total return: 20.6%
Citywire A-rated JP Morgan manager Amit Mehta takes the top spot for his performance with the $2.2 billion JPM Emerging Markets Small Cap fund, which he has been running since May 2012. The London-based manager’s performance over five years is no less impressive, returning a total return of 59.7% in comparison to the MSCI EM Small Cap TR benchmark’s return of 34.9%.
Mehta is overweight South Africa, one of his top country allocations. The country makes up 10.7% of his fund. One of the South African companies he is backing is retail corporation Clicks Group, which includes global health and beauty brands like GNC and The Body Shop.
In February 2016, Citywire + rated Austin Forey, a portfolio manager on a number of emerging market funds, joined Mehta on the small cap strategy.