The Brandes Emerging Markets Value Fund
Akin to its name, the Brandes Emerging Markets Value Fund seeks to find those companies domiciled in emerging market nations whose stocks are “undervalued relative to their financial strength and upside potential” according to fund literature.
The fund has been around for over two decades, having been incepted in August 1996. As of the end of November 2016, it had been managing assets worth $1.14 billion. Meanwhile, as of September-end – the latest complete portfolio available – it had a total of just 66 holdings in its portfolio. The fund is managed by Mauricio Abadia, Doug Edman, Christopher Garrett, Louis Lau, and Gerardo Zamorano.
The Brandes Emerging Markets Value Fund – Class A (BEMAX) is up ~27% in the YTD period until December 12. It has struggled in the past three months until the aforementioned period, though, with its performance placed in the red.
Sectoral and geographic breakdown
The pursuit of value stocks has led to a balanced mix across market caps. Nearly half of the stocks are invested in large caps with the other half invested in mid and small cap stocks. The average market cap of the fund is $21.8 billion vis-à-vis $53 billion for the MSCI EM Index.
Compared to the MSCI EM Index, the BEMAX is sharply overweight the consumer discretionary sector, with the difference amounting to 12.7% as of September 2016. The fund is also overweight the telecom services and real estate sectors, among a few others. On the other hand, it is sharply underweight the information technology sector as compared to the index. The difference between their respective allocations to the sector is 21.7%. The fund is also underweight the health care and consumer staples sectors, apart from a few others.
Emerging countries from Asia and Latin America form a combined 71% of the portfolio with the fund’s assets split nearly evenly across the two geographies. Brazil is the most invested country, commanding 18.5% of the portfolio. It is followed by South Korea and Russia, with China and Mexico rounding-off the top five invested countries, in that order. The fund is sharply overweight Brazil and Russia, while being noticeably underweight China.
Panama-based Copa Holdings SA (CPA) is the fund’s single-largest holding, forming 3% of the fund’s September 2016 assets. Mexico’s CEMEX, S.A.B. de C.V. (CX) is second, closely followed by Austria’s Erste Group Bank AG (EBKDY). South Korea’s Hyundai Mobis Co. and Russia’s Public Joint Stock Company Oil Company LUKOIL (LUKOY) round-off the top five invested companies.
Fees and minimums
You’d require a minimum investment of $2,500 for regular accounts for investing in class A of the fund. The minimum subsequent investment is $500. The BEMAX can charge a maximum sales load of 5.75% as a percentage of price offered. Inclusive of the management fee of 0.95% and 12b-1, or distribution fee of 0.25%, the net expense ratio for the Class A shares of the fund is 1.37%.
Let’s look at the Fidelity Advisor Emerging Markets Fund – Class A (FAMKX) in the next article.