SmartMoney Fund Screen / Emerging Markets
My, how the mighty have fallen. Just months ago, China was the envy of the investing world. Funds tracking that country posted 50% average annual returns in 2006 and 2007. But as if on cue, when the torch went out at the Beijing Olympics, so, too, did the prospects for this marketplace.</br></br>Since then China has experienced slowing growth, rising unemployment and huge stock-market losses. China-focused offerings lost 52.7% in 2008 and are down an additional 6.3% so far this year.</br></br>China's fall from grace isn't a singular incident. Emerging markets in general have undergone a dramatic comeuppance as the recession that started in the U.S. spread to almost every part of the globe. Brazil, a market that enjoyed a run based on soaring oil prices, has seen its stock-market returns cut in half as prices for black gold plummeted, according to Standard & Poor's. Russia and Taiwan experienced pullbacks just as severe. And Iceland saw its economy spiral out of control when its currency, the krona, went into a freefall.</br></br>Not surprisingly, investors have been pulling their money out of emerging-market funds. According to Citigroup, $480 million was pulled out of these funds in December, marking the sixth consecutive month of net outflows. At the end of 2008, emerging-market fund assets stood at $78 billion, down from $174 billion earlier in the year. That tally is right about where these funds were in 2006 and 2007 before they took off.</br></br>Poor performance and net outflows can be a disastrous combination for mutual-fund investors. So this week we're focusing on this niche in order to provide a little insight into their prognosis -- and to highlight offerings we think are top-notch. We knocked out emerging-market funds that charge a load and searched for ones that met our usual performance and fee criteria. Only four funds made our final cut.