Kuta Beach

Kuta Beach

Friday, 23 May 2008

Investing in Emerging Markets Through Sunsuper

For a long time I've been looking for a way to invest in emerging markets. Problems I usually encounter are high fees and savings plans that force you to invest, say, $100 per month. I was thinking of buying an iShares MSCI Emerging Markets ETF from the ASX but recently there has been an announcement that ETFs will be purged on the ASX. All this has left me scared to invest in ETFs.

While looking through Sunsuper's investment options I noticed that they do provide a fund that allows you to invest in emerging markets. It is the AMP Capital Multi-Manager Emerging Markets. Its MER of 0.9 per cent is fairly high compared to the other funds offered by Sunsuper, but it's quite cheap for an emerging markets fund. Another issue is that it's actively managed. Some say that active management is a plus for emerging markets.

I am thinking of putting 30 per cent of my super into emerging markets. The rest will go into the SSgA Global Index Plus, which is an enhanced index fund. There is a hedged version and an unhedged version. The AMP Emerging Markets fund is unhedged, I think. Vanguard recommends I invest half in unhedged and half in hedged if I want to get rid of currency risk. This means I'll have to invest 50% SSgA Global Index Plus Hedged, 20% SSgA Global Index Plus Unhedged, and 30% AMP Multi-Manager Emerging Markets.

I won't be modifying my super till I get a new job, so all this is just research at the moment.

The reason why I want to invest in emerging market is because I believe that if you do not have the ability to pick stocks you should simply diversify across all stocks of all companies. Why then would you not invest in developing countries since they make up 40 per cent of the world economy?

No comments: