The best funds to access the cheapest global stock markets

I received a lot of great feedback on my research piece last week 'Finding Value: The cheapest stock markets to invest in now'. I also received the following question via this month's Chatterbox.

Hi Damien, I found your article on the Cheapest Stock Markets historically interesting. From the list countries like Brazil and South Korea historically are cheap, but how would you invest in Brazil or specifically South Korea?

It is a great question and I really want to encourage people to put their thoughts and questions down in the Chatterbox section each month as it can help influence the research I produce and therefore give you the insights you are after.

How do you pick a fund that invests in one geographical area?

There are very few funds out there that invest in a single country but there are some. The reason for the lack of supply is the simple lack of demand. Fund houses launch new funds all the time but the type of fund they launch is determined by what they think they can market (sell) and what people seem to be buying. In a lot of ways it is like the fashion industry, apart from you can end up losing your shirt.

With every bubble there comes a glut of new fund launches trying to cash in. In the dotcom boom there was a flurry of tech funds. Then it was the turn of BRIC funds (Brazil, Russia, India and China) when BRIC became the buzz acronym.

A number of fund launches don't end up producing the interest the fund house had hoped for so they are quietly scrapped. They do this by merging the fund into one of their bigger funds. It's all a bit hush hush and fund houses use the same technique when a fund underperforms for a long period of time.

In my piece on the cheap global stock markets, along with South Korea and Brazil mentioned earlier, some of the cheapest stock markets in terms of their historic averages are:

• China
• Russia
• Poland
• Turkey
• India

In most cases there are few funds that just focus on the countries listed above. Instead the funds that do have exposure tend to invest across a range of different geographical areas. For example they may have 10% of assets in China, another 10% in India etc. These funds provide a diversified and less concentrated (and therefore less risky) way to gain exposure to country specific stock markets. It would always be my preferred way to access these markets. The trouble is that you would have to analyse thousands of funds to work out what their geographical split is and then rank them accordingly. So to save 80-20 Investor subscribers the hassle I've done it for you.

Below I've listed the funds (unit trusts only) with the greatest exposure to each of the aforementioned stock markets as a percentage of the funds's assets. Those funds highlighted in green also appear in at least one other table, or in other words they have significant exposure to more than one of the cheap stock markets listed above

How to use these tables

I've presented the tables in the same format as those throughout 80-20 Investor. Should you decide that you want exposure to South Korea, like the subscriber mentioned above, then you can see the funds with the highest allocation and how they have performed recently.

China & Japan

If you want to gain exposure to Japanese equities or China's stock market then simply go to the Best funds by sector section and look for the Chinese or Japanese sectors for fund ideas. These two sectors have an established universe of funds with Henderson China Opportunities and M&G Japan both currently appearing in the Best of the Best selection (80-20 Portfolio).

Russia

Fund name	ISIN Code	Russia exposure	1 month return	3 month return	6 month return	Max fall in last 6 months	Ongoing charge
Neptune - Russia & Greater Russia	GB00B04H0T52	95.58	22.5	34.39	1.2	-30.21	2.09
Invesco Perpetual - Emerging European	GB00B28J0X51	55.97	15.56	25.15	4.82	-19.07	1.92
Jupiter - Emerging European Opportunities	GB0031862534	49.72	13.88	14.14	3.19	-15.53	1.93
JPM - New Europe	GB0001655124	45.6	13.73	13.41	1.07	-16.13	1.68
Aberdeen - Eastern European Equity	GB00B3MPT513	43.4	14.43	14.57	3.96	-12.87	1.91
Allianz - BRIC Stars	GB00B0WDH725	12.8	9.68	13.27	16.65	-5.47	1.99
Templeton - Global Emerging Markets	GB0034009190	11.02	7.3	6.52	-0.56	-9.87	1.95
Fidelity - Emerging Europe Middle East and Africa	GB00B29TR993	9.9	9.34	10.33	14.45	-6.15	1.89

Poland

Fund name	ISIN Code	Poland exposure	1 month return	3 month return	6 month return	Max fall in last 6 months	Ongoing charge
Invesco Perpetual - Emerging European	GB00B28J0X51	20.02	15.56	25.15	4.82	-19.07	1.92
Jupiter - Emerging European Opportunities	GB0031862534	17.35	13.88	14.14	3.19	-15.53	1.93
JPM - New Europe	GB0001655124	16.1	13.73	13.41	1.07	-16.13	1.68
Aberdeen - Eastern European Equity	GB00B3MPT513	11.2	14.43	14.57	3.96	-12.87	1.91

 

Turkey

Fund name	ISIN Code	Turkey exposure	1 month return	3 month return	6 month return	Max fall in last 6 months	Ongoing charge
Aberdeen - Eastern European Equity	GB00B3MPT513	24	14.43	14.57	3.96	-12.87	1.91
Jupiter - Emerging European Opportunities	GB0031862534	21.63	13.88	14.14	3.19	-15.53	1.93
JPM - New Europe	GB0001655124	21	13.73	13.41	1.07	-16.13	1.68

 

India

Fund name	ISIN Code	India exposure	1 month return	3 month return	6 month return	Max fall in last 6 months	Ongoing charge
Jupiter - India	GB00B2NHJ040	98.3	4.06	8.48	26.32	-2.13	1.82
Neptune - India	GB00B1L6DT30	96.18	2.32	7.75	23.75	-2.34	2.3
First State - Indian SubcontinentB	GB00B1FXTF86	85.7	2.65	7.7	24.27	-1.94	1.96
Neptune - Emerging Markets	GB00B2R07G10	35.64	9.3	13.66	18.62	-3.14	2.86
Baillie Gifford - Pacific	GB0006063126	29.7	5.41	7.91	18.14	-1.59	1.54
First State - Asia Pacific Sustainability	GB00B0TY6S22	29.6	3.57	9.05	18.05	-1.68	1.7
Allianz - BRIC Stars	GB00B0WDH725	29	9.68	13.27	16.65	-5.47	1.99

 

Brazil

Fund name	ISIN Code	Brazil exposure	1 month return	3 month return	6 month return	Max fall in last 6 months	Ongoing charge
Allianz - Brazil	GB00B52L0D85	100	13.97	2.09	-14.98	-17.84	2.19
Aberdeen - Latin American Equity	GB00B41QSW23	59.7	8.65	1.56	-13.69	-14.44	2.04
Invesco Perpetual - Latin America	GB0033027706	54.24	9.15	2.45	-13.09	-15.52	1.75
Neptune - Latin America	GB00B1L6F199	51.31	9.2	3.87	-15.7	-17.28	2.16
Threadneedle - Latin American	GB0001531754	48.8	9.05	3.56	-12.98	-15.67	1.75
First State - Latin America	GB00B64TSD33	29.6	9.46	6.3	2.7	-5.2	2.02
Allianz - BRIC Stars	GB00B0WDH725	12.7	9.68	13.27	16.65	-5.47	1.99

 

South Korea

Fund name	ISIN Code	Korea exposure	1 month return	3 month return	6 month return	Max fall in last 6 months	Ongoing charge
Baring - Korea Trust	GB0000840719	100	14.26	18.27	17.54	-9.81	1.69
Melchior - Asian Opportunities	GB00B06ZV610	24.9	10.65	13.9	23.5	-1.92	2.55
Baillie Gifford - Pacific	GB0006063126	23.3	5.41	7.91	18.14	-1.59	1.54

 

Single country ETFs for the brave

I also suggest that you check out the ETF listings in the Best funds by Sector as there are country specific funds listed there. Just be wary though that a number of these are leveraged (i.e they borrow money to invest) which makes them very risky indeed.

 

 

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