Global Allocation - March 2012
Sentiment across the world markets is showing interesting dynamics. The S&P 500 has been making steady progress since the depths of 2009, and the US has been showing an economic revival, with jobs growth and a reduction in unemployment figures.
Emerging markets are also still producing strong returns, and fund managers looking after global funds are keen to get in on the activity.
The question is how do they make the most of that? Some fund managers would argue that it is not a simple question of buying stocks in Asia or in the US. In many cases it is buying shares in companies that are likely to benefit both from the US and rapidly developing economies.
Operating in what is a global economy, many companies profiting from the emerging markets are based in developed markets. This could be companies benefiting from increased activity, or particularly those in the consumer goods’ markets, as new consumers come into the market and seek new items as part of a changing lifestyle.
The challenge for many fund managers is working out which companies will be long-term beneficiaries of emerging market economic expansion, and what will happen to the US economy.
Many fund managers take a bottom-up approach. The problem is that global funds have not been performing that well against the MSCI World Index recently. The challenge is whether the fund managers are getting their allocation right.
Hal Austin is editor of Financial Adviser
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