investing

Artisan Developing World Heads Off Emerging Challenges

A stake in multinationals buoys this fund when developing markets sink.

A few months short of its fifth birthday, Artisan De­veloping World (symbol ARTYX) is youthful by mutual fund standards. But before taking the helm, manager Lewis Kaufman spent a decade managing foreign-stock strategies at Thornburg Investment Management, including roughly five years running a diversified emerging-markets stock fund (also called Developing World) whose annualized returns dazzled.

So far, so good for version 2.0: Since its 2015 inception, Artisan Developing World has posted an 11.6% annualized return—ahead of the MSCI index’s 6.2% return and the 5.5% average gain among peer funds. (Returns are through January 31.)

Like many emerging-markets funds, Developing World has a big bet on China. The fund dedicates 35% of assets to Chinese stocks (compared with 34% in the MSCI Emerging Markets index), favoring firms that will benefit from the country’s productive economy and expand alongside China’s growing skilled labor force and middle class.

But an outsize bet on China has been bad news for emerging-markets funds this year. Investors are worried about the coronavirus and its impact on businesses and the economy in China, as well as ripple effects in the region. So far in 2020, emerging-markets funds are down an average 4.2%.

The Kiplinger Letter
Kiplinger's Personal Finance

Getty Images

But Developing World returned 0.5% over the same period, cushioned in part by its investments in developed-country multinational firms. Firms such as Visa (V), which hopes to capitalize on a global shift to cashless payments, and Netflix (NFLX), with a subscriber base now more than half non-American, benefit from positive trends in emerging markets but tend to hold up better when emerging-markets stocks hit the skids. Kaufman says the outbreak is likely a short-term problem for Chinese businesses, and that the government has shown a quicker and more thorough response than it did with SARS.

The rest of the portfolio is invested in such markets as Latin America and Southeast Asia. Kaufman doesn’t expect these economies to expand rapidly, so he hunts for firms that provide a product or service in high demand in an underserved market. MercadoLibre (MELI), an e-commerce and mobile payments business in Latin America, is a top holding.

Most Popular

Tax Wrinkles for Work-at-Home Employees During COVID-19
taxes

Tax Wrinkles for Work-at-Home Employees During COVID-19

Are your home office expenses deductible? How does going out of state to work for a while affect your tax picture? There are some interesting wrinkles…
November 9, 2020
Retirement: It All Starts with a Budget
personal finance

Retirement: It All Starts with a Budget

When you’re meeting with your financial planner, do you talk about your budget? If not, you should.
November 10, 2020
Will Joe Biden Raise YOUR Taxes?
taxes

Will Joe Biden Raise YOUR Taxes?

During the campaign, Joe Biden promised that he would raise taxes for some people. Will you be one of them?
November 10, 2020

Recommended

BCSVX: A Foreign Fund With Flair
Foreign Stocks & Emerging Markets

BCSVX: A Foreign Fund With Flair

Brown Capital Management International Small Company's team of managers identifies exceptional growth companies.
November 24, 2020
Parnassus Mid Cap’s Bets on Industrials and Tech Take Off
Kip 25

Parnassus Mid Cap’s Bets on Industrials and Tech Take Off

This member of the Kiplinger 25 gained 9.5% over the past 12 months, beating 76% of its peers.
November 24, 2020
10 of the Best Target-Date Fund Families
mutual funds

10 of the Best Target-Date Fund Families

The best target-date funds are a 'set it and forget it' approach to your retirement, but which fund family should you trust your money?
November 12, 2020
The Best Fidelity Funds for 401(k) Retirement Savers
Investing for Income

The Best Fidelity Funds for 401(k) Retirement Savers

Fidelity funds are renowned for their managers' stock-picking prowess. We rate Fidelity's best actively managed funds that are popular in 401(k) plans…
November 11, 2020