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Fund Spy

Medalist Emerging-Markets Funds Open for Business

Several actively managed funds have closed in recent years, but investors still have many solid options to choose from.

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The diversified emerging-markets category has grown the fastest in terms of the number of new funds compared with all other non-U.S. equity groups; just over one third of the offerings in the category opened within the past three years. The category has also seen several of its actively managed offerings shutter their doors to new investors over the same period, including  Aberdeen Emerging Markets (ABEMX),  Invesco Developing Markets (GTDDX),  Lazard Emerging Markets Equity (LZOEX),  Oppenheimer Developing Markets (ODMAX), and  Virtus Emerging Markets Opportunities (HEMZX), all of which have Morningstar Analyst Ratings of Silver.

That's good news for investors in these funds because it should ensure their managers won't have to alter their strategies to accommodate huge inflows. However, this trend may be creating a bit of a roadblock for investors looking to add an emerging-markets equity holding or upgrade from their current fund. (Now is a contrarian time to look into such funds: The category is down 4% for the year to date through Aug. 13, one of the worst showings for any equity group, although of course it could fall further.)

Karin Anderson has a position in the following securities mentioned above: ODMAX, NEWFX. Find out about Morningstar’s editorial policies.