GLOBAL - Developed market managers have proven to be more skilful at picking securities than emerging markets managers, said Rick Di Mascio, chief executive at Inalytics.
"We find it very difficult to find skill in emerging markets managers. We do find it, but it's not in a higher proportion or any more prevalent than with any other manager," said Di Mascio (pictured).
"We are... possibly even more likely to find truly skilful managers in more developed markets... Some of the best managers we've seen are in developed markets," he added.
The manager research firm believes there are two defining characteristics in manager skill - getting more than half of their investment decisions right, and knowing when to cut their losses. This helps the firm suss out luck from skill.
The problem with more illiquid markets like emerging economies, said Di Mascio, is even when the manager makes a poor bet, it's hard to get out of that security.
His comments come as investors pour record amounts of assets into the emerging markets. According to data from EPFR Global, which tracks fund flows, global emerging markets equity funds are on track to break through last year's record flows.
EPFR found some $38.5bn has been invested in these funds through 30 September, the equivalent of 87% of last year's flows.
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