Four top emerging-market investment trusts

Emerging-market indices skew towards Asia, and especially China, Korea and Taiwan. So forget passive index hugging, says Max King, try these four broad-based EM funds instead.

The investment promise of emerging markets is enticing: to profit from the superior growth of underdeveloped economies. But the reality can be disappointing. In the five years to the end of 2007, the MSCI Emerging Markets index nearly quintupled in value in dollar terms. However, ten years later, it still stands below the peak then reached.

There are many reasons why emerging markets (EMs) have been less rewarding than predicted. Economic growth doesn't necessarily translate into corporate profits, which is why investment in most Chinese companies (other than a few tech giants) has been persistently disappointing. Corporate governance and corruption are a regular problem, as illustrated by Petrobras, Brazil's scandal-hit energy company. Domestic politics, social unrest, arbitrary government intervention and fluctuations in the domestic currency add to the risk. All this was reflected in the maxim of the legendary investor Nils Taube "never to invest in a country where you didn't need an overcoat in winter".

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Max King
Investment Writer

Max has an Economics degree from the University of Cambridge and is a chartered accountant. He worked at Investec Asset Management for 12 years, managing multi-asset funds investing in internally and externally managed funds, including investment trusts. This included a fund of investment trusts which grew to £120m+. Max has managed ten investment trusts (winning many awards) and sat on the boards of three trusts – two directorships are still active.

After 39 years in financial services, including 30 as a professional fund manager, Max took semi-retirement in 2017. Max has been a MoneyWeek columnist since 2016 writing about investment funds and more generally on markets online, plus occasional opinion pieces. He also writes for the Investment Trust Handbook each year and has contributed to The Daily Telegraph and other publications. See here for details of current investments held by Max.