Advisers should not dump the emerging markets equity class on the back of negative press, but look to funds that are exposed to regions that have current account surpluses.
J O Hambro Capital Management Limited fund manager, Paul Wimborne — who manages the BT Wholesale Global Emerging Markets Opportunities fund — said that some countries within the emerging markets sector were well-placed for success despite a gloomy outlook for the market at large.
“The headlines coming out of most emerging market economies continues to remain quite negative, particularly in relation to countries that require external funding,” he said.
“Their economies continue to be bad, [and] we don’t expect the domestic side of those economies to recover any time soon, if anything, things could possibly get worse.
“[However] you shouldn’t write off the emerging market equity asset class as a result. There are still parts of the asset class that are very well positioned from an equity point-of-view.”
Wimborne highlighted China, South Korea, Taiwan and Mexico as countries with strong US-facing export industries that will enable them to prosper, while other emerging markets struggle.
“You need to be selective in emerging markets,” he said. “You have to be picking the right companies and particularly the right countries.
“Some countries are going to do very badly in this environment and some countries are going to do well.”
