Dreyfus Emerging Markets Fund

Scorecard
2 / 5 Stars
Lipper
1 1 1 2 2
Zacks Investment Research
5 (Strong Sell)
Standard & Poor's
1 / 5 Stars
TheStreet.com
E- (Sell)

#100 in Diversified Emerging Mkts

U.S. News evaluated 206 Diversified Emerging Mkts Funds. Our list highlights the top-rated funds for long-term investors based on the ratings of leading fund industry researchers.

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Performance

The fund has returned -1.69 percent over the past year, -6.36 percent over the past three years, 11.01 percent over the past five years, and 7.69 percent over the past decade.

Trailing Returns Updated 03.31.2014
Year to date -1.3%
1 Year -1.7%
3 Years (Annualized) -6.4%
5 Years (Annualized) 11.0%
10 Years (Annualized) 7.7%

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Summary

Many emerging market funds dive into fledgling companies abroad, betting on rapid, exponential growth. Dreyfus Emerging Markets management takes a different tack, instead favoring value stocks in unpopular or beaten-down markets. Management’s picks might grow slower than high-flying stocks, but its value-focused discipline offers less volatility in the notoriously unpredictable emerging markets arena.

As of April 22, 2014, the fund has assets totaling almost $716.56 million invested in 141 different holdings. Its portfolio consists of larger-cap foreign value stocks.

The fund performed fairly well in early 2010 as its holdings in the tech and financial sectors thrived. Consumer and business demand for electronics drove up the share price of South Korea tech giant Samsung, one of the fund’s top holdings as of the end of February. Lately, management has increased the fund’s exposure in India and South Korea, betting on individual stocks as opposed to the wider influences of politics and economics. Portfolio manager Warren Skillman says that in the near future, he plans to invest more in South Africa and also find more opportunities in the technology, insurance, and food processing industries. The fund has returned -1.69 percent over the past year and -6.36 percent over the past three years.

This fund’s value discipline and management’s preference for larger firms has sheltered it somewhat from the volatility of emerging market economies and has produced fairly good long-term results, However, Morningstar notes that management’s tendency to sell picks that appreciate out of the fund’s thrifty price range might cause the fund to miss out on gains in market upswings. The fund has returned 11.01 percent over the past five years and 7.69 percent over the past decade.

Investment Strategy

According to Morningstar, management follows a strict value discipline and won’t buy a stock unless it’s in the cheapest 40 percent of its home market and significantly less expensive than its global competitors. Management seeks strong growth potential and tangible catalysts that are expected to improve a firm’s financial standing. Portfolio manager Warren Skillman says the fund seeks to build broad diversification across countries and sectors. In general, management doesn’t hang on to stocks that have appreciated out of that bottom 40 percent of its market, but Skillman says it’s not a hard-and-fast rule. “As stocks move out of that range, we would be looking to replace them but we have often held onto stocks because the fundamentals have supported it.”

Role in Portfolio

Morningstar calls this fund a “specialty” investment.

Management

Kirk Henry has managed this fund since its 1996 inception, supported by 15 investment professionals. He also co-manages the USAA Emerging Markets fund. Warren Skillman joined the fund in 2007 as a portfolio manager and senior research analyst.

Fees

Dreyfus Emerging Markets Fund has an expense ratio of 1.75 percent.

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Risk

Emerging markets tend to be more volatile than developed markets.

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