S&P has identified two strong-performing emerging markets stock funds that received four out of five stars from S&P's MarketScope Advisor ranking system. S&P's ranking system takes cost, performance, risk, and other metrics into account to come up with a list of highly-rated funds. Schroder Emerging Market Equity (SEMVX) opened in 2006 and has outperformed its peers in each of the past three years, according to S&P. About 75 percent of the fund's total assets are invested in emerging markets countries. More than half of its holdings are in Asia, while almost a quarter are in the Middle East and Africa. Management invests in about 150 total holdings. Some of the largest ones include Samsung (Korea), Petrobras (Brazil), Gazprom (Russia), China Construction Bank, and Teva Pharmaceuticals (Israel). In a recent filing, management says it generally maintains a bias toward mid-cap stocks.
S&P also highlights the popular Vanguard Emerging Markets Stock Index (VEIEX). Since it's a passively-managed fund that only seeks to track an index and doesn't rely on active stock-pickers, its annual fees are a low 0.4 percent and its annual turnover rate is about 12 percent. The fund tracks the MSCI Emerging Markets Index and invests in more than 800 stocks. Nearly 20 percent of the fund's total assets are in Chinese companies, followed by Brazil (15.8 percent) and Korea (13.4 percent). The fund has returned almost 11 percent, on average, over the last 10 years.
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