Our emerging markets fund continued to climb on the strength of companies in China, India, and Taiwan.

 

July

2017 Year to Date

Since Inception (Annualized)

Inception Date: 11/1/2011

Motley Fool Emerging Markets Fund (TMFEX)

5.39%

24.96%

7.41%

FTSE Emerging Markets All Cap China A Inclusion Index

5.51%

20.82%

4.49%

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

Emerging-market stocks had a tremendous July, continuing the strong start from the first half of 2017. The Motley Fool Emerging Markets Fund went along for the ride. The fund has gained nearly 25% in the first seven months of the year, and we are continuing to let our winners run.

The three largest countries in the benchmark index -- China, India, and Taiwan -- are among the best-performing countries this year. Both China and India continued that run in July by gaining more than 7% for the month. While our fund is underweight those countries, the investments we hold there have done exceptionally well lately. All five of our investments in China and India -- Alibaba, Baidu, Ctrip.com, Tencent, and HDFC Bank -- gained 10% or more during the month. Brazil also had a spectacular July for the index, clocking a monthly gain of 11%. The two Brazilian investments we held throughout the month, Odontoprev and Multiplus, earned 18% and 9%, respectively, for the fund.

During the month, we had only one trade, selling our remaining shares of Tarpon Investimentos. This Brazilian asset manager had been a substantial underperformer since we began acquiring shares in late 2012. As a fund manager whose fortune is tied to Brazil, Tarpon saw its investment portfolios suffer in the years 2013-2015. But as the Brazilian market rebounded in 2016, Tarpon failed to capitalize, and its share price continued to decline, along with its asset base. With its market cap now below $50 million in U.S. currency and very light trading volume in its shares, we’ve cut our losses and will look elsewhere to reinvest the remaining capital from that sale.

As you may expect from the fund’s overall results, we had many more winners than losers for the month. The only noteworthy underperformer was last month’s biggest gainer, Almarai. You may recall from last month’s update that Almarai's stock price jumped based on index provider MSCI’s decision to place Saudi Arabia on its watch list for future inclusion in its emerging-markets index. While this move caused a trading frenzy in late June, the price reverted to its normal trading range as soon as investors returned from their holidays in early July. The net result is much ado about nothing. Almarai gained 19% in June and lost 18% in July, and the net result is a loss of 2% over the two months. (I’ll admit I had to double-check my math on that one.)

The list of top performers was extensive, but it was led by Baidu (+27%), Odontoprev (+18%), Douzone Bizon (+15%), and MercadoLibre (+15%). As always, I’d encourage you not to dwell too heavily on short-term performance. While it feels good to see our investments appreciate in value as much as they did in July, we are better served keeping our eyes on the horizon.

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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