Emerging markets continued to soar in April, and our fund delivered another solid month.

 

April

2017 Year-to-Date

Since Inception (Annualized)

Inception Date: 11/1/2011

Motley Fool Emerging Markets Fund (TMFEX)

3.74%

11.73%

5.59%

FTSE Emerging Markets All Cap China A Inclusion Index

0.45%

12.38%

3.33%

For a standardized list of performance for the Emerging Markets Fund, please click here. For fund holdings, please click here.

Emerging markets have been strong globally so far this year, but we began to see some divergence across regions in April. That didn’t stop the Motley Fool Emerging Markets Fund from delivering another solid month. We mostly sat still, giving time for our allocation decisions to bear fruit. As of April 30, more than 42% of the fund’s assets are in the largest 10 holdings, and we are down to a svelte 29 total investments.

We had only one sale in April, as we managed to close out our investment in Groenlandsbanken (Bank of Greenland), a trade we started in March. This small, thinly traded bank’s dominant position in Greenland left it as a steady business with very few opportunities to grow. Our investment returned about 9% per year while we held it, but since our return came entirely in the form of a hefty dividend, we had no realized gains on the sale.

We bought a bit more MercadoLibre in early April. While this small trade increased our position by only about 10%, it worked out in our favor very quickly, as the company’s first-quarter earnings announcement in early May exceeded expectations. (More on that in next month’s update.)

Finally, we also increased our investment in Brazilian dental-care company Odontoprev. This provider of pre-paid dental plans has had a slow start to the year, but we like the long-term opportunity in front of it. Only 11% of Brazil’s population currently has a private dental plan, compared with 60% in the United States. At the same time, Brazil has more dentists than any other country in the world, with 12% of all dentists located there. This situation allows Odontoprev to operate an asset-light platform matching plan members with local dentists. The dental-plan market has historically been available only as a benefit to employees of large corporations, but now Odontoprev is making progress selling individual plans, at a higher price per person. We love investing in companies with simple, attractive business models that have plenty of addressable market remaining in front of them, and we think Odontoprev fits the description.

Moving on to last month’s returns, Latin America was the weakest region for us and for our benchmark. We continued to see negative returns from Brazilian asset manager Tarpon Investimentos, which lost 17.3% in April. Peruvian financial-services company Credicorp also did poorly, declining 5.9%. But we also saw some good performance from the region, thanks to Grupo Aeroportuario Del Sureste’s 9.3% gain, and the 8.2% and 7.7% returns from MercadoLibre and Multiplus, respectively.

Our investments in the Asia-Pacific region also managed to outpace the modest returns from our benchmark. Tencent Holdings continues to do well, gaining 8.0% during the month, while the Chinese market gained only a bit more than 1%. We also had strong performance from Lippo Malls Indonesia Retail Trust (+7.6%), Douzone Bizon (+6.5%), and Nippon Indosari Corpindo (+6.5%). The only significant detractor we had in this region was Top Glove, which declined 6.4%.

The best returns we experienced in April came from the EMEA region, which is short for Europe, Middle East, and Africa. This was the best-performing region for our benchmark as well. We particularly benefited from NMC Health (+16.2%), BGEO Group (+15.6%), and Safaricom (+6.8%). The worst performance we saw in this region came from the mild 3.2% decline in DP World.

The Emerging Markets Fund changed its benchmark from the FTSE Global All Cap ex-US (Fair Value 16.00 EST) Net Tax (US RIC) Index to the FTSE Emerging Markets All Cap China A Inclusion (Fair Value 16.00 EST) Net Tax (US RIC) Index on February 28, 2017.

The Emerging Markets Fund changed its name from The Epic Voyage Fund on February 28, 2017.

 

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