Rplan calls for more focus on emerging market risk

Investors have been “taken in” by the hype surrounding emerging markets, according to online investment platform Rplan.

A survey by the company showed 27 per cent of retail investors had more than a fifth of their portfolios in emerging market investments, with 6 per cent saying they had more than half of their portfolio invested in the asset class.

Not only this, but advisers said 14 per cent of their clients had a quarter or more of their portfolios in emerging market equities and debt.

Rplan warned that many investors “may have been taken in by the market hype” around the asset class in the past few years and had not fully taken into account the potential volatility. The platform said roughly 135 emerging market funds were being promoted to investors and that 96 per cent of them had the two highest risk rankings of six and seven.

“Emerging markets have been flavour of the month in the investment world for many years and the marketing literature has really pushed the potential upside here, but there has not been enough focus on the risks involved, which can be substantial,” Rplan chief investment officer Stuart Dyer said.

“Good examples of this include the crises between Russia and Ukraine, in the Middle East and in parts of Latin America.”