SKAGEN Global reached a record high in September, ending the month up 0.6 per cent, having totally returned 12 per cent year to date. Yet this was not enough to pull out a strong performance for the fund, which suffered from having about 30 per cent of its portfolio invested in lagging emerging markets. As a result, the fund is still behind the global MSCI AC World Index, which recorded 17.5 per cent in returns in comparison to SKAGEN Global’s 17.2 per cent return.

The firm’s other flag ship fund, SKAGEN Kon-Tiki, on the other hand performed extremely well, outrunning the MSCI Emerging Markets significantly. Despite emerging markets lagging significantly global equities and capital outflows continuing for the asset class, the fund managed a 6.8 per cent return in comparison to the index’ 1.1 per cent.

“SKAGEN Kon-Tiki continued to deliver a strong relative return as a result of good stock picking. The fund rose 1.4 per cent in the third quarter and is up 3.5 per cent for the year,” the firm said.

Discussing the state of emerging markets more broadly, the funds’ portfolio managers even went so far as to say that “the EM phrase is starting to lose its glory and might not even be an asset class by the end of this decade. The term emerging markets covers countries which are very different in terms of economic development,” the firm said in reference to the disparity seen across the asset class with countries like Brazil, China and Russia performing strongly compared to laggards like Indian and Indonesia.

The Euro-centric equity fund, SKAGEN Vekst also did well, outperforming its benchmark index in the third quarter, with 13.3 per cent in returns compared to the index’ 12.2 per cent. The strong results were largely driven by the European part of the portfolio, the firm said, with telecommunication, consumer discretionary and information technology coming out as the strongest sectors.

“As a result if the heightened expectations, we also see that capital is flowing into the European stock market. As long as European companies continue to deliver improved earnings, it is natural to assume that the trend of net purchases of European stocks will continue,” the firm said when commenting on the continents’ outlook.

In related news, this publication recently published an exclusive interview with SKAGEN, who despite the freefall in emerging markets this year, believes there are significant opportunities for long-term investors to benefit from exceptionally low valuations in the asset class. Read more on that subject, here.