Leave Emerging Markets to the Fund Manager Pros (Investors Chronicle)
The Chronic Investor Blog has a post noting there is still a place for emerging markets in the portfolios of private investors and not just because they seem to perform out of synch with developed markets – making them a useful diversifier. However, the blog cautions that investors cannot rely on the blanket assumption that emerging markets are due to “converge” with richer peers. Instead, the blog argues that investors need to work out which economies look better placed to perform (e.g. Poland) and remain alive to a changing outlook (e.g. will Modi transform India?). It was also noted:
Taking a longer-term view, it is important to recognise that emerging markets are not pre-destined to emerge into the developed world. Those that do – such as South Korea – are the exception, not the rule. It is sobering to recall that conversations about emerging markets in the 1970s would likely have included references to countries like Zimbabwe, Venezuela and Pakistan. China was the basket case back then.
The post concluded by saying:
Most private investors are probably better off outsourcing the job to a fund manager, who can choose not only the more dynamic countries, but also the more dynamic sectors of what are often immature stock markets, heavy on former state-owned enterprises, resource companies and banks. The average emerging-market fund has beaten the MSCI index over the past three difficult years. This is one area where the professionals easily justify their fees.
To read the whole article, Leave emerging markets to the pros, go to the Chronic Investor Blog on Investors Chronicle.
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- Frontier Markets: Attractive Valuations with Limited Correlation (Mobius Blog)
- Indices for Measuring Emerging Market Political Instability (Enterprising Investor)
- What Does it Take to be an Emerging Markets Investor? G&M
- Why Small Cap Emerging Market Funds Win Big and How to Pick the Right Fund (Barron’s)