The duo, who oversee a host of EM equity strategies at US asset manager Pimco, have risen from sitting within the lower rankings of the nearly 600 fund managers in the sector over the past year.
Fahmi, who runs three funds within Pimco’s range of funds subadvised by Research Affiliates, has leapt from 568th overall to be the fourth strongest performer in the 12 months to the end of November 2016. This marks an improvement of 564 ranking places.
Meanwhile, Arnott, who is founder and chairman of Research Affiliates, is named on three funds alongside Fahmi, as well as running the Pimco RAE Fundamental Emerging Markets fund. His performance is, therefore, slightly different, albeit with an improvement of 559 places.
Two of the funds the duo co-manage are Dublin-domiciled: the Pimco GIS RAE Fundamental Plus Emerging Markets and Pimco GIS RAE Fundamental Emerging Markets funds. The former was launched in late 2013 and the latter was brought to market in mid-2015.
Focusing on the longest running of these two funds, Arnott and Fahmi became co-leads on the equity strategy during a period of upheaval at Pimco. They were assigned to the fund to succeed Scott Mather and Marc Seidner in September 2014, just after Bill Gross resigned from the company.
The duo's first year running the fund was during a period of underperformance. The fund lost 27% in US dollar terms over the 12 months to the end of November 2015. This is while the MSCI EM (Emerging Markets) TR USD fell 16.6% over the same period.
However, in the following 12 months, the duo has posted a return almost treble that of the index. This has seen the Pimco GIS RAE Fundamental Plus Emerging Markets fund return 23.9% against an index rise of 8.8% in US dollar terms.
For greater context, of the 609 active in the global emerging market equities sector over the 12 months to the end of November, the average return stood at 4.9% in US dollar terms.
In terms of current allocations, the systematic-backed fund currently has 508 positions with 99.3% exposure to emerging markets. The bulk of these are in financials, which account for a third of the total allocation, compared with a 24% index exposure.
Meanwhile, Arnott and Fahmi have placed a much lesser emphasis on IT stocks than the index, holding just 8% of allocations here against an index weight of 23%. Instead, the pair prefer to allocate to energy (17.7% vs 7.4% in the index).