Talking Point  

Investors have several options for emerging markets

Investors have several options for emerging markets

Investors seeking exposure to emerging market equities have several options, but overall tend to favour general global funds.

Ben Yearsley, investment director at consultancy firm Fairview said: “I would have a mix of EM and Asia funds as I tend to view EM and Asia as one bucket these days.

"You can then add some specialist funds around the edge such as small cap, individual country or frontier markets.

"So I would have broad funds such as Fidelity emerging markets or JPM emerging markets income (probably blending the two); then a quality Asian fund such as First State Asia focus.”

Adrian Lowcock, head of personal investing at the Willis Owen platform said: “I would go for a global emerging markets fund, but not a regional or country-specific one.

"This is because a global fund could potentially have no or little emerging markets exposure, while investing in a country or region in emerging markets is more suitable for larger portfolios when they already have a core emerging markets fund and they can act as satellite holdings; although, this can add risk in exaggerating or diluting the asset allocation of the emerging market fund manager.”

Tom Sparke, investment director at GDIM, a discretionary fund management firm in Cambridge, was somewhat more positive in regional emerging market funds. He said deciding on whether to include such a fund depended on the risk profile of the client.

Mr Sparke said: “So for example, our balanced risk models contain Asia, EM and India-specific fund as we wanted exposure to various regions but with a specific emphasis on India. 

In our lower risk models we have a less nuanced approach as we have less to allocate to these areas and will use a broad Asia fund to gain a wide exposure. 

"Conversely our aggressive funds have a large risk budget so we have Asian, EM, India and Chinese exposures too.”

david.thorpe@ft.com