OVER the last five years, investors in emerging-markets mutual funds have paid plenty and gotten little in return. Emerging-markets funds lost an annualised average of 3.19 per cent over the last five years, investment research company Morningstar said. Yet they are far more expensive, on average, than actively managed US domestic large-cap funds, which returned about 10 per cent a year annualised for the same period. Expense ratios for actively managed emerging-market funds were 1.55 per cent, compared with 1.15 per cent for US domestic large-caps.
Investors have responded by fleeing emerging markets; money is churning out of the sector's funds and exchange-traded funds (ETFs). Total net outflows...
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