OP-Emerging Middle Class B
Wealth from increasing wealthThe increasing wealth of the middle class in emerging economies is not just about more and more people being able to buy a new fridge or a pair of running shoes. Alongside accelerating consumer demand, companies' operating environment is stabilising, which contributes to democracy and reduction of political risks. As a theme fund, OP-Emerging Middle Class offers a unique and tailored way to invest in companies which benefit from their domestic market trends within emerging economies.
- The fund invests in companies benefitting from economic growth in emerging markets and the increasing wealth of local population.
- Growth in emerging economies is based, for instance, on high and growing population, favourable age structure and urbanisation.
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Subscription fee |
Annual management fee |
Redemption fee |
|---|---|---|
| 0,75 % | 2,50 % | 0,75 % |
Agreements under a systematic investment plan are not subject to subscription fees. Fund units generate OP bonuses.
Whereas economic growth in Western G7 countries' is slow, private consumption in emerging markets is estimated to grow at a much faster rate in the future. By the end of this decade, consumer spending in the BRIC countries alone ‒ in Brazil, Russia, India and China ‒ is predicted to represent up to one-half of aggregate growth. For local businesses, growth creates remarkable opportunities. Broad-based and growing population bases, favourable age structures and accelerating urbanisation all contribute to growth in emerging economies.
OP-Emerging Middle Class invests globally in emerging equity markets, selecting companies benefitting from economic growth and especially from increasing wealth of local population in the emerging economies. The fund’s investments are allocated to sectors where consumer goods and services they produce are likely to see structural growth in demand in the long term.
Emerging market equity funds are designed for investors seeking high returns from strongly growing emerging markets. The OP-Emerging Middle Class theme fund is a good fit for investors seeking to benefit from the increasing affluence of, and changing consumer behaviour among, population in the emerging markets. While many elements here are attractive, a person investing in OP-Emerging Middle Class also needs to be aware of the special characteristics and risks related to emerging markets. The risk level in emerging markets is basically always higher than in advanced markets, and the fund takes high active risk. The fund's value may vary significantly depending on the market situation and the fund's value performance may differ from that of other comparable funds. Consumer demand in emerging economies being a long-term investment theme, this fund is mainly recommended to an investor who intends to redeem his/her units after seven years at the earliest.
The portfolio outperformed the index during the quarter. From the country perspective, the overweight stance towards China contributed strongly to relative performance. At a group level, favourable positioning in Retailing, Semiconductors & Semiconductor Equipment, Food, Beverage & Tobacco, Consumer Services and Materials boosted relative returns. However, weak security selection in retailing offset some of these gains.
The exposure to premium baijiu producer Kweichow Moutai added notable value. Despite a lockdown and subdued consumer sentiment, the company reported strong revenue and profit growth, driven by a mix upgrade from newly launched products with higher prices. Furthermore, there are expectations for a significant ex-factory price hike for its bottles. The position in online travel agency Trip.Com gained amid optimism on travel recovery.
Consumer facing internet company Meituan gained on expectations of a recovery in consumption as the reopening of major cities and reduced mobility restrictions lifted investor sentiment. Meituan’s core food delivery business also showed steady growth and improving operating profits. Elsewhere, JD.Com rose after posting resilient results in the first quarter.
OP-Emerging Middle Class is an equity fund which invests its assets in emerging equity markets on a global scale in companies that are expected to benefit from growth in consumer demand in emerging economies. The Fund’s investments are allocated to sectors where consumer goods and services they produce are likely to see structural growth in demand in the long term.
The Fund’s investments are mainly based on direct equity investments. In its investment operations, the Fund may use derivative instruments in order to hedge against the risk of adverse market movements and exchange rate changes, to replace direct investments and to promote otherwise effective portfolio management.
The Fund’s market exposure may vary in such a way that the Fund invests a minimum of 75% and a maximum of 100% of its value in equity markets. The equity exposure typically varies between 90 and 100%.
The Fund invests its assets broadly among various companies. The Fund typically invests its assets in equities of around 40–60 companies but this number may vary depending on the investment manager’s view.
The portfolio manager makes investment decisions based his prevailing view on the market. Key issues in the context of the fund’s investment decisions include the portfolio management’s views on individual companies.
The Fund’s benchmark index is MSCI Emerging Markets TR Net. With active investing, the Fund seeks to outperform its benchmark index in the long term. The Fund mainly takes notable active risk and it may differ significantly from the composition, weights and risk level of the benchmark index.
The Fund promotes environmental and social characteristics and, to ensure it, uses environmental, social and governance (ESG) analysis and excludes certain investments.
Exclusion: The Fund excludes from its active direct investments controversial weapon manufacturers, mining companies producing thermal coal, power companies using thermal coal, tobacco companies, and companies that have breached international standards and where engagement has been unsuccessful. The list of exclusions is public. In addition to general exclusion rules, the Fund does not invest in companies whose principal business is in unconventional oil and gas extraction.
Use of ESG data in the investment analysis: ESG factors are considered in the investment process with the help of data by an external ESG service provider and the ESG tool developed internally by OP Asset Management. Considering ESG factors in the investment process means, for example, that the risks and opportunities related to the environment, society and governance are made transparent using selected indicators from each area.
Violations of international standards: The Fund is screened regularly for non-compliances with international standards. In the event that a non-compliance is detected, an influencing process is begun with the company in question. The aim is to make non-compliant companies change their practices and begin to comply with international standards in their operations. If influencing proves fruitless, the company may be removed from the Fund portfolio and placed on the exclusion list.
Minimum share of sustainable investments: In accordance with the minimum amount stated below, the Fund allocates investments into companies whose business promotes one or more UN Sustainable Development Goals (SDG) without harming other sustainability factors or objectives. Sustainable investments are determined using OP Asset Management’s analysis model which is based on an external service provider’s SDG and sustainability data.
Shareholders’ meetings: The Fund votes in shareholders’ meetings through a service provider in line with OP Fund Management Company Ltd’s shareholder engagement principles that take responsibility aspects into account.
Assessing good governance practices: Analysing the target company’s governance is an important part of the investment process. To us, good governance is a key foundation for any company’s financial success, regardless of sector. When assessing governance, some of the areas considered include the appropriateness of the target company’s administrative organisation, the target company’s actions in relation to its personnel, and the target company’s rewarding and taxation practices. In assessing good governance, we use an external service provider’s analysis and our own qualitative analysis if no external data is available. We screen the funds regularly to check them against the criteria of good governance. Minimum limits apply for these criteria.
Basic data
- Fund manager
- FIL (LUXEMBOURG) S.A.
- Benchmark index
- MSCI Emerging Markets TR Net
- Start date
- 05.02.2014
- ISIN
- FI4000076302
- fund serie
- Income unit
- Fund size
- 51,4 meur
- Serie value (20.11.)
- 86,16 EUR
- Monthly review
- Download
- Key Information Document
- Download
- Rules
- Download
Accumulated profit (19.11)
| 1mth | 3mth | 6mth | 1 y | 3 y p.a. | 5 y p.a. | |
|---|---|---|---|---|---|---|
| OP-Emerging Middle Class B | −3,04 % | +6,53 % | +5,79 % | +15,50 % | −10,14 % | −4,59 % |
| Benchmark | −2,83 % | +3,98 % | +3,63 % | +18,14 % | −0,07 % | +3,94 % |
Yearly performance
| 2019 | 2020 | 2021 | 2022 | 2023 | YTD | |
|---|---|---|---|---|---|---|
| OP-Emerging Middle Class B | +20,33 % | −2,90 % | −3,76 % | −25,04 % | −4,02 % | +15,07 % |
| Benchmark | +23,25 % | +8,54 % | +4,86 % | −14,85 % | +6,11 % | +14,61 % |
Key figures
| Volatility 12 m | vola 12m | Sharpe 12 m | Duration | |
|---|---|---|---|---|
| OP-Emerging Middle Class B | 14,72 % | - | - | |
| Benchmark index | - | - | - |
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