Markets funds there earn returns at least 7 percentage points higher than mutual fund managers globally
[HONG KONG] STOCK pickers focused on the least-developed markets are trouncing their benchmark index and producing annual returns at least seven percentage points higher than mutual fund managers around the world.
Mark Mobius's Templeton Frontier Markets Fund and 12 peers investing in countries from Vietnam to Nigeria and Romania earned an average 24 per cent last year, topping the 8.4 per cent gain in the MSCI Frontier Markets Index. They beat the Standard & Poor's 500 Index, the Stoxx Europe 600 Index, the Topix Index and the MSCI Emerging Markets Index even as funds in the United States, Europe, Japan and emerging markets trailed the benchmark gauges.
The winners are travelling to nations that most money managers avoid, taking advantage of scarce information to buy undervalued stocks. Investments in companies such as Nairobi-based East African Breweries Ltd and Nigeria's Access Bank plc delivered higher returns with lower volatility than developed-market counterparts more than 50 times their size, including Anheuser-Busch InBev NV and Bank of America Corp.
"The companies are overlooked and under-owned," Carlos von Hardenberg, an Istanbul-based money manager at Franklin Templeton Investments who helped Mr Mobius post a 24 per cent gain in the firm's US$1.3 billion frontier fund last year, said on Jan 16. "Markets are far less efficient."