Ignore developed markets at your peril
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While there are obvious opportunities in emerging markets, fund managers have warned that investors not lose sight of opportunities in developed markets.
Speaking at the Legg Mason Investment Symposium held in Sydney and facilitated by the PortfolioConstruction Forum, investment specialist Richard Gillham of Global Currents Investment Management said it was important to take note that while there were opportunities in emerging markets, there were also opportunities in developed markets. An example of this, he said, is the manufacturing recovery in the US.
“Being overweight in emerging markets is not so much misguided, but I think you need to look below the surface,” he said.
The Permal Group investment strategist Timothy Schuler said perhaps emerging markets were slightly overvalued and were being priced at “Utopian levels”.
He said while consumption in emerging markets would come, The Permal Group would tend to look at corporations with global branding.
Facilitator Graham Rich of the PortfolioConstruction Forum said those in the investment management, portfolio construction and financial advice spaces had an increasing responsibility to relearn what markets are doing, “not just emerging markets”.
He said those who ignore the US, for example, do so at their own peril.
“But it’s important to take note that the US of today won’t necessarily be the same US that we’ve grown up with,” Rich said.
“The environment of the next couple of decades will probably be enormously changed because of perhaps circumstances [developing countries] have put themselves in, and because emerging markets (not just Asia) will increasingly influence what’s going on. So we have a multi-polar environment driving growth, which supports the point of seeking out pockets of opportunity rather than just assuming that what we have learnt is going to be the case in the future.”
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