Is Now the Time to Upgrade Your EM Manager?

Markets have been extremely difficult this year across assets. Some investment professionals see environments like this as a crucial time to stand out for current clients and develop new relationships. Bear markets can present an opportunity to demonstrate expertise and take deliberate action—to harvest tax losses, enhance diversification, swap and upgrade managers, segment near-term income needs, and consider the medium-term return outlook.

This is not the Calamos Global and International Team’s first rodeo, or Fed hiking cycle for that matter. Since 2008, Calamos Evolving World Growth Fund (CNWIX) has applied a risk-managed approach to emerging markets, having generated returns above the emerging markets benchmark and peer category average, and reduced risk in the process.

The fund’s performance during the multi-year Covid pandemic cycle is the latest illustration of our dynamic, active approach. This is a period that confronted managers with a rapid drawdown in 2020, the recovery rally, technological disruption, geopolitical conflict, higher inflation and tighter monetary policy.

We analyzed how many of the largest and widely held active emerging markets funds met this test. Here’s a summary of our findings—note how CNWIX distanced itself from this group over this period of sea change and beyond.

• This set of the 15 largest active open-end fund managers represents approximately $159 billion of assets across, with average assets over $10 billion.
• The average fund experienced more than $140 million in net outflows YTD through September 30.
• Six out of 10 EM funds have experienced a Morningstar Rating downgrade in response to a weakening risk-adjusted performance trend.
• CNWIX outperformed nearly all these funds over time, showing its ability to deliver over market cycles for clients. Namely, the fund leads on a multi-period review: Relative to the average largest active open-end fund managers, CNWIX outperforms YTD and trailing 3-, 5-, and 10-year periods.

The CNWIX Difference

CNWIX’s differentiated performance is the direct result of its differentiated approach:

• Focusing on higher-quality companies with compelling growth characteristics.
• Conducting research across the capital structure and utilizes Calamos’ experience in convertible securities to dynamically manage the risk profile, seeking to improve skew and provide asymmetric returns.
• Identifying durable secular themes that provide a tailwind for sustainable growth and a franchise premium.
• Actively incorporating ESG research into company analysis, team discussion and risk management. Emphasizing investment in economies enacting structural reforms and improving economic freedoms.

The fund has delivered:

• Compelling performance during the volatile and highly rotational market cycle of the last two years.
• Strong rankings within its Morningstar category, and a 5-star Overall Morningstar Rating.
• Since inception outperformance versus the MSCI Emerging Market Index, with lower beta, standard deviation and downside semivariance.
• Lower volatility than index since inception.

For more information on CNWIX as well as some ideas on harvesting tax losses, please talk to your Calamos Investment Consultant at 888-571-2567 or caminfo@calamos.com.