OP-Emerging Middle Class

Wealth from increasing wealth

The 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.

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 delivered positive returns and strongly outperformed the benchmark. At a group level, strong stock picking in media & entertainment segment added value. Listing gains from the participation in the IPO for Chinese short video application company Kuaishou Technology’s was the top contributor. The company is one of the most popular social platforms in China, ranking the third in terms of online time spent and its platform has not yet been fully monetised. This also reflected in China featuring as a key contributor at the country level. Overall, the Chinese market was lower in February given a wider market rotation from growth to value after the Lunar New Year holiday. Against this backdrop, the lack of exposure in NIO (electric vehicle) and the underweight stance in the Alibaba Group (e-commerce) also enhanced relative gains. Within retailing, the holding in India-based online travel company MakeMyTrip gained after it reported encouraging results for the third quarter, reflecting the signs of recovery in the travel industry. The holding in low-cost airline operator Wizz Air also added value following the UK government’s announcement of a phased plan to end lockdown measures in the country.

Within banks, the holding in Russian lender TCS Group added value as the broader Russian market rallied, supported by rising oil prices and strengthening local currency. Kaspi, a Kazakhstan-based fintech and e-commerce player, was another key contributor. Security selection in India also enhanced portfolio gains. At a stock level, retail-focussed lender Bajaj Finance and credit card issuer SBI Cards rose as the market welcomed an expansionary budget by the central government. Elsewhere in India, Eicher Motors disappointed, as a number of sell side analysts downgraded the stock citing an expensive valuation as the rationale. Among Brazilian names, the position in mobile payment-based e-commerce service company PagSeguro Digital contributed as it reported better-than expected net income for the fourth quarter and provided robust guidance for FY2021. On the downside, shares in Brazilian health care company Hapvida Participacoes were caught in profit taking following a strong rally in the previous month following reports of a potential merger between the Hapvida Participacoes and Notre Dame Intermedica.

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.

Read more about fund’s responsibility on the fund’s Finnish pages.
More details Basic data, performance and fact figures

Basic data

Fund manager
Fidelity International
Benchmark index
MSCI Emerging Markets TR Net
Start date
05.02.2014
ISIN
FI4000076294
fund serie
Accumulation unit
Fund size
132 Meur
Serie value (20.04.)
158,49 EUR
Monthly review
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Rules
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Brochure
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Accumulated profit (19.04)

1mth 3mth 6mth 1 y 3 y p.a. 5 y p.a.
OP-Emerging Middle Class A −2,35 % +0,94 % +14,43 % +30,58 % +1,19 % +5,26 %
Benchmark - - - - - -

Yearly performance

2016 2017 2018 2019 2020 YTD
OP-Emerging Middle Class A +7,18 % +19,95 % −16,75 % +20,32 % −2,58 % +6,16 %
Benchmark - - - - - -

Key figures

Volatility 12 m vola 12m Sharpe 12 m Duration
OP-Emerging Middle Class A 17,34 % 1,79 -
Benchmark index - - -

Owner-customer benefits as of 1 January 2021

  • Book-entry account and custody €0: Custody of Finnish and foreign shares and ETFs without monthly charges. 
  • Buy and sell fund units €0: Buy, sell and switch nearly all of our funds without costs and earn OP bonuses by investing in mutual funds.*
  • Discount on share trading: Brokerage fee 0.17% (at least €7), maximum trading fee for Finnish shares and ETF products 1% until August 2021.
  • New benefit: Equity analyses €0: Free equity and market analysis.
  • Benefits of saving through insurance: Take out an insurance policy, switch between investment instruments and transfer funds free of charge. Earn OP bonuses from unit-linked insurance assets.

*No OP bonuses will accrue from the R2 Crystal Fund nor from institutional series of funds.

OP bonuses

In addition to OP bonuses earned through saving and investment, owner-customer earn bonuses from

  • loans
  • funds in accounts
  • purchases you have paid with the OP-Visa credit
  • insurance premiums for home, family and motor vehicle policies.

From 1 November 2020, OP bonuses will accrue from:

  • home loans, secured bank loans, student loans
  • savings and investment accounts
  • mutual fund units and unit-linked insurance
  • non-life insurance bills

The change on 1 November 2020 means that no OP bonuses will accrue from:

  • deposits in current accounts
  • unsecured consumer loans (Flexible Consumer Credit, Special Consumer Credit, One-off Credit and Overdraft Facility)
  • OP hire purchase
  • Purchases paid using OP Visa as a credit card, the balance of credit with interest of OP-Visa and OP-Mastercard cards

OP bonuses are used for the bank’s service charges and insurance premiums.

 

OP Fund Management Company Ltd manages OP mutual funds.