With 2016 officially half over, global equity funds are reflecting a story of mixed performance. Some groups are up, while some are down and geographic location is driving market returns. Thus far, Asia and Europe are lagging, while North and South America are outperforming on a relative basis.
Latin American equity funds tracked by Morningstar are ahead by 22.53% year to date and are leading all regions. Countries that make up this group such as Brazil, Mexico and Peru are part of the broader emerging markets group, which is also outperforming.
Although broadly diversified emerging market funds have lagged developed markets over the past several years, the tide is changing.
Diversified emerging market funds are ahead by 4.85% this year, led by the hot performance of funds like the Invesco Developing Markets (GTDDX), 17.11%, and the Brandes Emerging Markets Value (BEMAX), up 15.62%.
GTDDX has most of its equity exposure to Asia (46.90%) and the Americas (29.59%), while BEMAX has taken a similar approach by limiting exposure to Europe. Both funds are top-performing emerging market funds so far this year.
Despite the ripple effect of higher stock market volatility, funds that invest in large international companies have not been a haven of safety. As a group, diversified foreign blend funds with large-cap exposure have lost 4.90% in value.
Regionally, European stock funds are among the worst performing group and have lost 5.07% year to date. The bear market in European financial stocks has stung and the sector is down more than 25% this year.
Meanwhile, England is trying to stabilize its crashing currency.
For the first time since 1985, the British pound sank below $1.30 against the U.S. dollar. The pound is down more than 13% since the June 23 U.K. referendum to exit the European Union.
Over in Asia, Japanese stock funds have been hurt by a strong yen.