Strong growth in emerging markets - van Eyk

Emering markets offer investors stronger growth and less volatility than developed economies, according to a new report from van Eyk Research.

This is largely due to structural developments within the economies of these countries, which include management of debt levels and repayment practices.

Growth in these regions is also being driven by domestic consumers.

While van Eyk said fund managers continue to dedicate less research to emerging markets than developed countries, there is greater scope to identify undervalued investment opportunities.

The research house recommended that investors select fund managers that actively manage both their country and stock levels relative to the benchmark.

Suzanne Tavill, head of research and ratings, said: “In the review, we recommend investors tactically allocate 5 to 10 per cent to emerging markets, depending on their risk profile.”

The growth of China will also have a positive impact on other emerging markets, as its demand for raw materials and commodities increases.

“China will play an increasingly greater role in the world economy, as well as impacting on other emerging market regions,” she said.

Van Eyk suggested a diversified exposure across the regions of Asia and Latin America, as well as emerging markets in Europe, the Middle East and Africa.

“This diversification may protect the investor from any localised financial shocks, while providing exposure to a range of growth prospects,” Tavill said.