JEMI : JPMorgan Global Emerging Income lags benchmark
Over the year that ended on 31 July 2014 JPMorgan Global Emerging Markets Income’s net asset value return was 1.3%. this was a bit behind the MSCI Emerging Markets Index, which returned 3.6%. The good news for shareholders was that the share price returned matched this as the dividend was maintained. The strength of Sterling held back returns by 2.2% as the fund had weightings to countries with weak currencies such as Turkey, Indonesia and South Africa.
JEMI did not have much invested in India and this was a problem for them (relative to the MSCI Index) as the Indian market did well after the elections in that country. Being light in South Korea was also a problem but in Russia, a market where they had exposure that fell, they added value through stock selection – proving that investing in emerging markets is about more than asset allocation.
Stocks that did well for them included Wynn Macau (a Chinese gaming company), Cielo (a Brazilian credit card merchant acquirer) and Delta Electronics (a Taiwanese company involved in power equipment and industrial automation). On the down side they had a holding in Kumba Iron Ore which was a negative for performance as the company’s operational numbers worsened, suggesting a structurally poorer cash flow profile than we had predicted; and they didn’t have a holding in Naspers, the internet and media company: this stock rose strongly in the period as investors focused on the prospects for internet growth across Emerging Markets.