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

The 15 Best Stocks for the Rest of 2022
stocks to buy

The 15 Best Stocks for the Rest of 2022

The lesson of the past two years: Be ready for anything. Our 15 best stocks to buy for the rest of 2022 reflect several possible outcomes for the seco…
June 21, 2022
Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
Retirement Comfort: How to Avoid Running Out of Money
retirement planning

Retirement Comfort: How to Avoid Running Out of Money

When it comes to retirement planning, one thing all of us worry about is whether we will have enough money to last. Financial professionals can help y…
June 25, 2022

Recommended

Move Over ETFs: Direct Indexing Is an Investment Strategy Worth Paying Attention to
investing

Move Over ETFs: Direct Indexing Is an Investment Strategy Worth Paying Attention to

More flexibility, more control, the potential for higher returns and tax-reducing strategies: With pros like that, could direct indexing be right for …
June 25, 2022
Janus Henderson Global Equity Income Fund Hangs Tough
Kip 25

Janus Henderson Global Equity Income Fund Hangs Tough

A focus on dividend payers and defensive stocks has kept the Janus Henderson Global Equity Income Fund afloat in a rough market.
June 23, 2022
Ron Baron: A Fund Legend Shares Stock-Picking Secrets
mutual funds

Ron Baron: A Fund Legend Shares Stock-Picking Secrets

The ability to buy and hold great growth companies for the long term is important to becoming a successful investor.
June 22, 2022
Baron Funds: The Masters of Growth Investing
mutual funds

Baron Funds: The Masters of Growth Investing

The Baron Funds have an extraordinarily long and successful track record. Here's how they do it.
June 22, 2022