Nvidia catapults EM stock picker to top ranking and irks rivals

First, the genius part. Kaufman has come up with a formula for generating double-digit annual returns in emerging-market stocks, a rare feat in a market that has gone nowhere for years. ADVERTISEMENT CONTINUE READING BELOW The phony critique: He’s done it largely by loading up the fund he manages at Artisan Partners — the Artisan Developing World Fund — with high-flying US tech stocks.

Thoughtful and creative means that, as of the last public filing, more than 40% of the fund’s $3 billion was invested in US-based companies. It’s not just tech stocks. It’s also names like Coca-Cola and Visa and Estee Lauder. Throw in European stocks and the percent of Kaufman’s portfolio invested in companies based in developed nations comes to more than 50%. The median number for rival emerging-market funds is 5%, according to Morningstar Direct.

Investors, in any event, have proven a bit cool to his approach. While his fund outperformed all other large emerging-market stock funds over the past five years, it lured almost no new money — on a net basis — during that time, according to data compiled by Bloomberg. That move paid off as the economic boom that had swept across emerging markets in the 2000s fizzled. After five years, the Thornburg Developing World Fund was up 56% — compared with 9% for the benchmark emerging-market index — and Kaufman was attracting attention.

Among the criticisms lobbed at Kaufman is that it’s a stretch to think of the likes of Nvidia, Snowflake and Crowdstrike as plays on emerging-market growth. Each of the companies gets more than half of its revenue in the US alone. In Snowflake’s case, it’s almost 80%. Another chunk of their revenue then comes from Europe.

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