Emerging Markets Equity Income - July Commentary

This is a marketing communication. Please refer to the prospectus, supplement and KID/KIID for the Funds before making any final investment decisions. The value of this investment can fall as well as rise as a result of market and currency fluctuations. You may not get back the amount you invested.  

Past performance does not predict future returns. 

In the second quarter, the Guinness Emerging Markets Equity Income Fund outperformed its benchmark despite the strong market, with the fund up 8.6% over the quarter against up 5.5% for the MSCI Emerging Markets Index. For the year to date the fund is up 7.1% versus the index up 5.4%. Further performance data is shown below.

Markets sold off sharply in April amid renewed trade conflict initiated by the Trump administration but have since more that regained their performance over the rest of the quarter. Technology, which saw a lacklustre performance in the first quarter, rebounded to continue its strong run from last year.

Latin American exposure within the portfolio has provided resilience given the ongoing backdrop of tariffs and trade conflicts. Latin American currencies have also supported returns in dollar terms.

On the outlook, we have had time to see how tariffs and the trade conflict are playing out. While the market is currently sanguine on the situation, we believe there is a potential for volatility to increase again, given the proximity of some of the deadlines and the complexity of many of the issues at stake.

Our overall reading of the situation has not changed much over time: we saw the aggressive opening position as a tactic to bring parties to the negotiating table. What is unclear is how long these negotiations will take (and they may not run to the US’s schedule) and whether they have the potential to genuinely reshape trade patterns and supply chains.

Despite the increased uncertainty, our focus remains the same – on companies that have consistently earned high returns on capital. Companies with such a track record have shown the ability to navigate periods of uncertainty in the past and we think are likely to continue to do so.

In this commentary we review the drivers of fund performance in the second quarter and report on the portfolio's leaders, laggards, positioning and recent changes.

Past performance does not predict future returns

Fund launch: 23/12/2016.

Source: FE fundinfo. Net of fees. Investors should note that fees and expenses are charged to the capital of the Fund. This reduces the return on your investment by an amount equivalent to the Ongoing Charges Figure (OCF). The OCF for the calendar year 2024 for the share class used for the fund performance returns was 0.89%. Returns for share classes with a different OCF will vary accordingly. Transaction costs also apply and are incurred when a fund buys or sells holdings. The performance returns do not reflect any initial charge; any such charge will also reduce the return.

The value of this investment can fall as well as rise as a result of market and currency fluctuations. You may not get back the amount you invested.
 

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