DENVER, Dec. 29, 2010 /PRNewswire/ -- Chartwell Partners' Emerging Markets Focus portfolio combines simplicity and focus with the goal of beating the emerging market benchmark index.
This portfolio contains five exchange-traded funds (ETFs) with each weighted 20%. This approach forces the fund manager to make some hard choices. The model uses a value led-momentum check strategy looking at relative valuations, price and fund flow momentum plus currency and macro forecasts. Chartwell Partner's Managing Director Carl Delfeld admits, "After filling a notebook full of facts and figures, there are many close calls that are made on instinct," based on his 25 years following emerging markets.
Here were the Emerging Markets Focus's picks in 2010: Chile, Indonesia, Malaysia, Brazil and Asia ex Japan (Australia, Hong Kong).
How did it do this year? The leaders were Chile (+43.2%), Indonesia (+35%) and Malaysia (+30.6%). The laggards were Brazil small cap (+12.4%) and Asia ex Japan (+11.8%). Note that the three leaders represent 60% of the portfolio but represent in total just 7% of the MSCI Emerging Markets Index. This is challenging this conventional index in a significant way. The Brazil small cap had a very weak first half followed by a strong rally in the second half of the year though it was decisively better than the large cap Brazil ETF that was up only 3%.
The Emerging Markets Focus portfolio almost doubled the performance of the benchmark MSCI Emerging Markets Index through December 26th: +27.26% to +14.42% for the index. Importantly, the fund avoided a direct play on China with the Shanghai market down 13% for the year.
Chartwell also offers the Emerging Markets Freedom portfolio, which includes 15 market-based countries from the MSCI Emerging Markets Index. As proxies for each market, Chartwell uses country-specific exchange-traded funds or ETFs.
The countries included in this basket are India, Brazil, Indonesia, South Korea, Taiwan, Chile, Mexico, Peru, Israel, South Africa, Turkey, Philippines, Malaysia, Thailand and Columbia. Over the past 12 months, the Chartwell Emerging Markets Freedom portfolio is up 30.1% versus 14.42% for the MSCI Emerging Markets Index Fund.
Chartwell Partners is an Asia and emerging markets advisory firm. Carl Delfeld is a Forbes Asia columnist who headed up the Japan/South Korea group in Boston with Bank of America, opening Asian markets as a Vice President with Robert W. Baird, and served as a consultant on emerging markets to the U.S. Treasury and U.S. Congress, and as a U.S. Representative to the executive board of the Asian Development Bank in Manila, Philippines during the administration of George H.W. Bush. He is a graduate of the Fletcher School of Law & Diplomacy and studied at Keio University and Sophia University in Tokyo, Japan.
SOURCE Chartwell Partners