Mutual Fund Rankings, 2013: U.S. stock funds lead our annual rankings of top-performing mutual funds in 11 categories
Harding Loevner’s Emerging Markets Portfolio, Advisor Class (HLEMX), a member of The Kiplinger 25, was listed as a top-ten performing diversified mutual fund for the 10-year period ended June 30, 2013. The corresponding article notes that emerging markets funds with frontier markets exposure, including HLEMX, have been better insulated from recent volatility in emerging markets. This month’s Kiplinger also ranked Harding Loevner’s International Small Companies Portfolio, Investor Class (HLMSX) as a top-ten small- and midsize-company international fund for the 5-year period ended June 30, 2013.
The Next Frontier
Pradipta Chakrabortty, Co-Lead Portfolio Manager for Harding Loevner’s Frontier Emerging Markets Portfolio, discusses his experiences, successes, and recommendations for investing in frontier markets and the possible “rewards for going off the beaten path.” He believes that investors need at “least a three-year, and preferably a five- to 10-year horizon to ride out the inevitable short-term volatility” in order to “get to the strong returns” in countries like Ghana, Pakistan, Kenya, and Bangladesh. According to Mr. Chakrabortty, the Frontier Emerging Markets Portfolio assesses not only an individual company’s competitiveness, but also analyzes “each country’s big picture, such as its political stability, exchange rates, and ability to fund itself” before making an investment in a frontier markets company.
8 Keys to Picking Winning Emerging Markets
Kiplinger’s notes that selecting a “well-managed fund,” such as Harding Loevner’s Emerging Markets Portfolio, Advisor Class (HLEMX), is the “best way most investors” can access emerging markets. The author notes that by choosing an actively managed fund like HLEMX and avoiding emerging markets index funds, investors may be able to better navigate the complexities of emerging markets and avoid their recent volatility.
Hottest Emerging Markets Funds
Investment News’ lists Harding Loevner’s Frontier Emerging Markets Portfolio, Institutional Class (HLFMX) as its number one “hottest emerging markets fund,” and highlights what we feel are our strong returns over the past three years.
Investing in Funds: A Quarterly Analysis
The Wall Street Journal
Harding Loevner’s Emerging Markets Portfolio, Advisor Class (HLEMX) was ranked among the top-performing funds for the ten-year period ended June 28, 2013 in the Wall Street Journal's quarterly review of mutual funds, "The Journal Report."
Changes to the 500
Harding Loevner’s Emerging Markets Portfolio, Advisor Class (HLEMX) was added to the Morningstar FundInvestor 500 this July. The article notes that HLEMX has outperformed four-fifths of its peers over the past decade, thanks in part to its focus on “companies with strong competitive advantages and healthy balance sheets,” which have provided “good defensive characteristics” and helped insulate the fund from market downturns in 2001 and 2008.
Mutual Fund Analyses
William Samuel Rocco
Morningstar identifies Harding Loevner’s Emerging Markets Portfolio, Advisor Class (HLEMX) as a “superior source of exposure to blue chips abroad” that focuses on investing in companies with “healthy balance sheets, clear competitive advantages, and other positive attributes along with strong growth rates." This article notes that the fund was weathered economic downturns better than many of its peers due to its “quality bias” and “price-conscious approach” yet has still managed to outperform in many mixed markets because of its managers’ positive stock selection.
What to Do About Rocky Times for Developing Markets
The Emerging Markets Portfolio, Advisor Class (HLEMX) has outperformed the MSCI Emerging Markets Index year-to-date in part due to its underweight in the poor performing, larger emerging markets that compose nearly half of the Index. The Kiplinger’s article noted that Portfolio Managers Rick Schmidt, Craig Shaw, and Rusty Johnson have diversified the Portfolio by also investing in “well-managed, financially strong businesses with strong competitive positions” in smaller emerging and frontier markets, such as Qatar, Nigeria, and Saudi Arabia.
Are the BRICs Broken?
The Emerging Markets Portfolio (HLEMX) is featured in this article advising emerging markets investors to “consider actively managed funds that have the flexibility to diverge from the benchmarks and invest in smaller companies and countries.” Harding Loevner’s focus on choosing companies with “good management teams and strong domestic franchises” is described.
Our 25 Favorite Mutual Funds
Kiplinger's Personal Finance
Kiplinger’s added the Emerging Markets Portfolio to its list of 25 “favorite no-load mutual funds.” Also in this article, Portfolio Managers Rusty Johnson, Craig Shaw, and Richard Schmidt are featured in a profile of the Portfolio. Mr. Johnson asserted that when considering new investments, “collective teamwork provides insight and minimizes errors.”
4 Big Concerns for Emerging Markets
Rusty Johnson, Co-Lead Portfolio Manager of the Emerging Markets Portfolio was consulted for this article discussing some of the risks facing emerging markets investors.
The Culprit: Flawed Indexes
The Harding Loevner Emerging Markets Portfolio (HLEMX) is highlighted in this discussion of the merits of active management when investing in emerging markets. The author notes the “unbalanced nature” of the MSCI Emerging Markets Index, noting that more than 40% of the Index weight is in Brazil, Russia, India, and China.
HLMIX Wins 2013 Lipper Fund Award
The International Equity Portfolio, Institutional Class was awarded best five-year risk-adjusted performance among 155 international large-cap growth funds for the period ended November 30, 2012.
How to Play Investing's Wild Frontier
The Wall Street Journal
Pradipta Chakrabortty, Frontier Emerging Markets Portfolio Co-Lead Portfolio Manager, is among the managers consulted in this discussion of the potential benefits (and risks) of investing in frontier markets. The article notes the greater growth potential and attractive valuations in these markets, and cautions about their higher volatility.
Where is Your Fund Manager From?
Alec Walsh, Co-Lead Portfolio Manager of the International Equity Portfolio (HLMNX), is featured in this article examining “home bias” of fund managers, and, in the case of non-US investing, information asymmetry. Mr. Walsh disagrees that information asymmetry is an issue, as he believes technology and globalization have minimized information advantages.
Europe: It’s Japan, Only Worse
In this article on investing in Europe in the aftermath of the debt crisis, the International Equity Portfolio (HLMNX) is highlighted as “a solid choice” for investors wishing to gain exposure to European multinationals with attractive valuations.
Investing Abroad This Year? Remember a Good Map
The New York Times
Simon Hallett, CIO, emphasizes that “investing in the emerging markets is a question of price as well as relative growth” in this piece on the investment potential of non-US stocks following their strong performance in 2012.
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. Current performance of the fund may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by calling (887) 435-8105, or visiting www.hardingloevnerfunds.com. Standardized performance for all Portfolios and links to their respective returns as compared to their benchmarks are available on the homepage, and can be accessed by clicking here.
Although a fund is no-load, management fees and other expenses will apply. Please refer to the Prospectus for further details.
References to other mutual funds should not be interpreted as an offer of these securities.
Mutual fund investing involves risk. Principal loss is possible. Investments in foreign securities involve greater volatility and political, economic, and currency risks and differences in accounting methods. Investments in emerging markets countries involve greater risks, such as immature economic structures, national policies restricting investments by foreigners, and different legal systems. Economic and political instability may cause larger price changes in emerging markets securities than other foreign securities. Such risks may be magnified with respect to securities of issuers in frontier emerging markets. The portfolio can have significant concentration in a single industry thereby making the portfolio vulnerable to factors affecting the industry. Investment opportunities in frontier markets may be concentrated in the banking industry. Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. Investments in lower rated and non-rated securities present a greater risk of loss to principal and interest than higher-rated securities. Investments in smaller companies involve additional risks such as limited liquidity and greater volatility.
Fund holdings and sector allocations are subject to change and should not be considered a recommendation to buy or sell any security. Current and future holdings are subject to risk. The ten largest holdings for each Portfolio as of the most recent quarter-end can be obtained by clicking the following links: HLMVX, HLMIX, HLMRX, HLMEX, HLFMX, HLMGX, HLMNX, HLMSX, HLEMX, HLMOX.
Diversification does not assure a profit nor protect against loss in a declining market.
Earnings growth is not a measure of the funds future performance.
Cash Flow: a measure of the cash generating capability of a company calculated by adding non-cash charges (e.g. depreciation) and interest expense to pretax income. Price/Earnings: the ratio of a firm's closing stock price and its trailing 12 months' earnings/share.
Return on Equity (ROE): the net income divided by total common equity outstanding, expressed as a percent.
The Dow Jones Emerging Markets Consumer Titans Index tracks 30 of the largest emerging-market companies in the consumer good industry.
The Dow Jones Emerging Markets Select Dividend Index is designed to measure the stock performance of 100 leading dividend-paying emerging market companies, which are selected based on dividend yield.
The Dow Jones Industrial Average is a price-weighted average of 30 significant stocks traded on the New York Stock Exchange and the Nasdaq.
The Russell 2000® Index measures the performance of the small-cap segment of the U.S. equity universe. The Russell 2000 is a subset of the Russell 3000® Index representing approximately 10% of the total market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination of their market cap and current index membership.
The Russell 1000® Index measures the performance of the large-cap segment of the U.S. equity universe. It is a subset of the Russell 3000® Index and includes approximately 1000 of the largest securities based on a combination of their market cap and current index membership. The Russell 1000 represents approximately 92% of the U.S. market.
The S&P 500 Index is an unmanaged index commonly used to measure performance of US stocks.
The S&P SmallCap 600 measures the small cap segment of the U.S. equity market. The index is designed to me an investable portfolio of companies that meet specific inclusion criteria to endure that they are liquid and financially viable.
The S&P SmallCap 600 returned 14.14% YTD as of 6/30/2013.
The MSCI All Country World Index is a free float-adjusted market capitalization index that is designed to measure equity market performance in the global developed and emerging markets.
The MSCI Emerging Markets Index is a free-float adjusted market capitalization index that is designed to measure equity market performance in the global emerging markets. The Index consists of 21 emerging market countries.
The MSCI EAFE Index (Europe, Australasia, Far East) is a free float-adjusted market capitalization index that is designed to measure developed market equity performance, excluding the US & Canada. The Index consists of 22 developed market countries.
The MSCI BRIC Index is a free float-adjusted market capitalization weighted index that is designed to measure the equity market performance of the following four emerging market country indices: Brazil, Russia, India and China. At 12/31/12, the MSCI BRIC Index returned 6.67%, 14.54%, -1.07%, -5.36%, and 19.78%, respectively, for the 3-Month, 1-Year, 3-Year, 5-Year, and 10-Year periods.
Countries in the MSCI Frontier, Global Emerging and Mature (Developed) Market Indices are measured by economic development, size, liquidity and market accessibility in order to be classified as Frontier, Global Emerging and Mature (Developed) countries. Each June, MSCI communicates its conclusions on the list of countries under review and announces the new list of countries, if any, under review for potential market reclassification in the upcoming cycle.
The MSCI Frontier Markets Index provides broad representation of the equity opportunity set across 32 countries while taking investability requirements into consideration within each market.
You cannot invest directly in an Index.
The Gross Expense Ratio for the Emerging Markets Portfolio, Advisor Class (HLEMX) is 1.47%.
The International Equity Portfolio, Institutional Class was ranked best out of 155 International Large-Cap Growth Funds for the 5-year period ended November 30, 2012. A Lipper Fund Award is awarded to one fund in each Lipper classification for achieving the strongest trend of consistent risk-adjusted performance against its classification peers over a three, five or ten-year period. Although Lipper makes reasonable efforts to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Lipper. Lipper Analytical Services, Inc. is an independent mutual fund research and rating service. © 2012, All Rights Reserved
For the period ending 7/31/2013, Morningstar ranked the Harding Loevner Frontier Emerging Markets Fund in the top 2% among 564 funds in the Diversified Emerging Markets category based on total returns. Morningstar ranking represents a funds total-return percentile rank relative to all funds that have the same Morningstar Category. The Highest rank is 1 and the lowest is 100. It is based on Morningstar's total return, which includes both income and capital gains or losses and is not adjusted for sales charges or redemption fees. Morningstar ranked the Harding Loevner Frontier Emerging Markets Fund in the 2%, 9%, and 63% out of 564, 359, and 263 Diversified Emerging Market Funds for the one-, three- and five-year periods ending 7/31/2013, respectively.
Morningstar Foregin Large Growth category: These funds seek capital appreciation by investing in large international stocks that are growth-oriented. Large-cap foreign stocks have market capitalizations greater than 5 billion. Growth is defined based on high price/book and price/cash-flow ratios, relative to the MSCI EAFE Index. These funds typically will have less than 20% of assets invested in U.S. stocks.
Morningstar Foreign Large Blend category: These funds seek capital appreciation by investing in a variety of large international stocks. Large-cap foreign stocks have market capitalizations greater than $5 billion. The blend style is assigned to funds where neither growth nor value characteristics predominate. These funds typically will have less than 20% of assets invested in U.S. stocks.
Morningstar Foreign Large Value category: These funds seek capital appreciation by investing in large international stocks that are value-oriented. Large-cap foreign stocks have market capitalizations greater than $5 billion. Value is defined based on low price/book and price/cash-flow ratios, relative to the MSCI EAFE Index. These funds typically will have less than 20% of assets invested in U.S. stocks.
Morningstar Diversified Emerging Markets category: These funds tend to divide their assets among 20 or more nations, although they tend to focus on the emerging markets of Asia and Latin America rather than on those of the Middle East, Africa, or Europe. These portfolios invest predominantly in emerging market equities, but some funds also invest in both equities and fixed income investments from emerging markets.
Past performance is not a guarantee of future results.