Why Emerging Markets doing poorly so far in 2013?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.

Why Emerging Markets doing poorly so far in 2013?

Postby crowd79 » Thu Mar 14, 2013 7:04 pm

My entire portfolio has done reasonably well as the overall stock market has done well so far in 2013, however LZOEX (Lazard Emerging Markets fund) has done poorly, down .20% for the year.

The fund makes up ~15% of my equities portfolio/11% of entire portfolio (including bonds). Is this too high a percentage to have in EM, or is this considered reasonable?
crowd79
 
Posts: 632
Joined: Sun Nov 18, 2012 11:37 pm

Re: Why Emerging Markets doing poorly so far in 2013?

Postby ofcmetz » Thu Mar 14, 2013 7:13 pm

I have no idea why they are doing so poorly, if that is what you call a 20 basis point drop. I only own emerging markets in the Total Stock Market Index Fund, but I don't think your allocation is unreasonable. I for one don't what all the assets in my portfolio to always rise together in unity.
Showing up at the donut shop at 5 am to get them hot out of the oil is an example of successful market timing.
User avatar
ofcmetz
 
Posts: 1789
Joined: Tue Feb 08, 2011 9:09 pm
Location: Louisiana

Re: Why Emerging Markets doing poorly so far in 2013?

Postby pingo » Thu Mar 14, 2013 7:34 pm

You're probably hoping for an explanation that probably exists and that someone probably knows. (Not me.) Sometimes the majority of market gains occur over the course of a few days out of the year. And for the benefit of newbies and lurkers on this site, I'll also say the following:

I don't know why they're doing poorly in 2013. Shoot, I don't know why they've done poorly (or well) in any given year. I merely expect that they will do very poorly and very well (and sometimes in-between) from year to year. Here's a link to see what I mean.

Callan Periodic Table of Investment Returns

Part of the benefit of investing in emerging markets stocks comes not only from holding on, despite years of terrible-to-mediocre performance (higher returns and higher risk go hand in hand), but from continuing to purchase and rebalance into EM when they are doing lousy.

:beer
pingo
 
Posts: 2065
Joined: Sat Sep 19, 2009 9:24 pm

Re: Why Emerging Markets doing poorly so far in 2013?

Postby zotty » Thu Mar 14, 2013 8:18 pm

MSCI Emerging Markets Index is up 300% over the last 10 years. Not too shabby. If you believe in reversion to the mean, this 10 year performance might provide a clue.
zotty
 
Posts: 684
Joined: Tue Sep 15, 2009 6:18 pm
Location: DFW, Texas

Re: Why Emerging Markets doing poorly so far in 2013?

Postby john94549 » Thu Mar 14, 2013 8:27 pm

Everybody has a theory, from the Beijing smog to fracking's threat to Gazprom. On a really slow news day (or week), the theories get even weirder.
john94549
 
Posts: 2884
Joined: Tue Jul 26, 2011 9:50 pm

Re: Why Emerging Markets doing poorly so far in 2013?

Postby mhc » Thu Mar 14, 2013 9:32 pm

This is why we diversify. Who knows which part of the market is going to be up or down?
User avatar
mhc
 
Posts: 2446
Joined: Mon Apr 04, 2011 11:18 pm
Location: NoCo

Re: Why Emerging Markets doing poorly so far in 2013?

Postby NHRATA01 » Fri Mar 15, 2013 1:22 pm

Perhaps with US markets performing quite well a lot of money is chasing performance there (here).
NHRATA01
 
Posts: 231
Joined: Sat Oct 22, 2011 2:57 pm
Location: New York City area

Re: Why Emerging Markets doing poorly so far in 2013?

Postby Call_Me_Op » Fri Mar 15, 2013 1:24 pm

It's called diversification, which I believe is one of the reasons that people invest in emerging markets - or at least I thought that's how it works.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein
Call_Me_Op
 
Posts: 4815
Joined: Mon Sep 07, 2009 3:57 pm
Location: Milky Way

Re: Why Emerging Markets doing poorly so far in 2013?

Postby fishnskiguy » Fri Mar 15, 2013 1:51 pm

Two reasons why EM is doing poorly: one, the dollar is getting stronger,two, Emerging Market economies are generally heavily dependent on commodities, and they have been weak of late.

My advice: buy whatever is doing worst in your portfolio. It's called re balancing.

Chris
Trident D-5 SLBM- "When you care enough to send the very best."
User avatar
fishnskiguy
Moderator
 
Posts: 2538
Joined: Tue Feb 27, 2007 2:27 pm
Location: Eagle, CO

Re: Why Emerging Markets doing poorly so far in 2013?

Postby MoonOrb » Fri Mar 15, 2013 2:04 pm

Two and a half months isn't a very long timeframe to worry about why a particular index or fund is doing well or doing poorly. When you diversify, some of your investments will appreciate at certain times and some will depreciate. This is to be expected, and since one of the reasons to diversify is to invest in classes that are not so closely correlated that they appreciate and depreciate at the same time, I'd argue that it is to be welcomed.

So in a diverse portfolio, you should pretty much always expect any particular class to be "doing well" or "doing poorly."
MoonOrb
 
Posts: 488
Joined: Thu Jan 24, 2013 7:58 pm

Re: Why Emerging Markets doing poorly so far in 2013?

Postby DualIncomeNoDebt » Fri Mar 15, 2013 2:17 pm

Here's a post I had concerning emerging markets, may be of some interest to you. viewtopic.php?f=10&t=109216
DualIncomeNoDebt
 
Posts: 356
Joined: Wed Jul 18, 2012 4:38 am

Re: Why Emerging Markets doing poorly so far in 2013?

Postby Phineas J. Whoopee » Fri Mar 15, 2013 2:18 pm

They're stock markets. They're doing what stock markets do.

When asked what the stock market will do, John Pierpont Morgan (1837 - 1913) reportedly said:
"It will fluctuate."
http://en.wikiquote.org/wiki/J._P._Morgan

I don't know that there's any other answer to be had, doubly so for such a small change over such a short period of time.

PJW
User avatar
Phineas J. Whoopee
 
Posts: 2887
Joined: Sun Dec 18, 2011 7:18 pm

Re: Why Emerging Markets doing poorly so far in 2013?

Postby BornInCA » Fri Mar 15, 2013 4:49 pm

maybe because they've been doing better than other markets for awhile and they're due for a breather. i always considered them to be more volatile than other markets. that's part of the reason i use veiex as the fund to contribute to my IRA on a bi-weekly basis. ;)
BornInCA
 
Posts: 249
Joined: Tue Oct 26, 2010 9:40 pm

Re: Why Emerging Markets doing poorly so far in 2013?

Postby Robert C F » Sun Apr 14, 2013 9:44 pm

One reason could be that this is an actively managed fund rather than an index. LZOEX trumpeted their returns for 2012, but they have the same problems of all actively managed funds, can they continue to outperform an index (most don't) and higher cost. I don't know what your overall international percentage is but 15% for EM seems high. Generally people do 20-30% total international of their equity holding. So 15% EM doesn't leave you room for developed markets. Hope this helps.
User avatar
Robert C F
 
Posts: 36
Joined: Wed Dec 08, 2010 3:35 am

Re: Why Emerging Markets doing poorly so far in 2013?

Postby asset_chaos » Sun Apr 14, 2013 10:29 pm

Vanguard (and/or FTSE) says the emerging markets currently make up about 10% of global stock market capitalization (graph on this page https://personal.vanguard.com/us/funds/snapshot?FundId=0628&FundIntExt=INT#tab=2). So while 15% is not unreasonable, you are nearly 50% overweight emerging compared to its global market weight. Did you mean to overweight emerging, understanding the extra risk and how that fit into your overall portfolio design? Or did the 15% just happen because emerging has done particularly well over the last couple of years vis-a-vis other market sectors? If it's planned, I suggest stick to your plan. If unplanned, I suggest making a plan and to consider rebalancing to an emerging markets allocation somewhat more in line with global market weight.
Regards, | | Guy
asset_chaos
 
Posts: 868
Joined: Tue Feb 27, 2007 7:13 pm
Location: Melbourne


Return to Investing - Help with Personal Investments

Who is online

Users browsing this forum: Google [Bot], Yahoo [Bot] and 112 guests