| BUSINESSWEEK ONLINE : JULY 26, 1999 ISSUE | ||||||||
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| BUSINESSWEEK INVESTOR
Where 4.9% Makes You a Star Templeton's J. Mark Mobius, the dean of emerging market investors, dashes around in a private jet, inspecting factories and grilling managers. Joshua Feuerman, head portfolio manager for SSgA Emerging Markets Fund (SSEMX), is a less frequent flier. When he touches down, he'll talk to pols and central bankers. But visit companies? Why bother? ''In emerging markets, returns are driven by the countries in which you invest, not the stocks,'' says Feuerman, 32. ''When markets collapse, it doesn't matter what stocks you own.'' A different approach, to be sure--but it allows the little-known $325 million SSgA Emerging Markets Fund to stand out. For the five years ended June 30, SSgA earned an average annual total return of 4.9%, vs. 4.6% for the Templeton Developing Markets I, a fund that with all its share classes amounts to nearly 10 times SSgA's size. Neither return sounds great until you consider that the average diversified emerging-market fund lost 1.43% a year during the same period. Even with its positive results, when compared with all equity funds, SSgA, like Templeton Developing Markets, gets an F. But when judged against its emerging-markets peers, SSgA gets an A, vs. Templeton's B+. Feuerman credits his fund's relative success to a strict investment discipline. The fund holds 350 to 400 stocks, and benchmarks its portfolio against the 30-country investable index run by the World Bank's International Finance Corp. ''We don't make any big bets,'' says Feuerman, who runs the fund with three associates. ''We make lots of little ones.'' Since inception, the fund has beat the IFC index decisively, with a 3% average annual return to the index's -3.7%. Relative to the weights individual countries have in the index, Feuerman is now overemphasizing Israel, South Korea, Mexico, and Egypt. SSgA's managers use quantitative methods to sift through financial and economic data to identify promising markets. After that, they screen for stocks using criteria such as price-earnings and price-to-book value ratios. ''We're always asking if there is something happening in that region that's not captured by the numbers,'' says Feuerman. The fund overweighted Israel and Egypt more than a year ago, and renewed prospects for Mideast peace, he says, make investment prospects that much better. By sticking close to an index, the fund minimizes turnover. That's critical to keeping expenses down. The fund has no load and a 1.25% expense ratio compared to the 2% category average. You could get even lower costs in an index fund, like Vanguard Emerging Markets Stock Index Fund. But that fund earns a C vs. its peers, while with SSgA you'll get an A. By Jeffrey M. Laderman _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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