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Seven magnificent ways to invest in global emerging markets
Long-term investors simply cannot ignore the power of emerging markets to shoot them out of trouble in retirement. Here are seven ways we recommend for investing in the shares of companies from countries as diverse as Brazil, Russia, India and China.
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More FTSE charts & pricesby Drazen Jorgic on Jul 06, 2010 at 09:20
Long-term investors simply cannot ignore the power of emerging markets to shoot them out of trouble in retirement. Here are seven ways we recommend for investing in the shares of companies from countries as diverse as Brazil, Russia, India and China.
Visit the Global Emerging Markets page in Citywire Selection for of our favourite ways to invest in these developing economies.
The emerging markets story
With the developed world’s recovery from the global financial crisis undermined by sovereign debt problems, the appeal of emerging market investments has come to the fore once again.
Unhindered by chronic indebtedness, countries such as Brazil, Russia, India and China have powered ahead to become some of the biggest drivers of global growth.
Certainly, their attractions are clear. Unlike the West’s aging population, emerging market countries have younger citizens who are going to be working for longer. Their population is growing five times as fast as ours and they also have an expanding middle class, which actually has savings to spend. Their economies, meanwhile, are growing at a much swifter pace than ours, although signs of a slow down in China show there are ups and downs in the emerging markets story.
Don’t ignore the risks
However, as these emerging market themes are hardly new there is a danger in the current uncertain climate that fresh investors will initially lose money if markets slip further.
Aside from the economic risks, emerging markets investments are priced in dollars which can be problematic for individuals in the UK investing in sterling. A fall in the dollar against the pound will hurt their returns.
All this leads on to the fundamental point that you should only invest in this sector if you can afford to be without the money for five years or more. Although emerging markets offer the potential for high investment returns, they are high risk and those returns can be extremely volatile.
Invest for the long term
Alex Montgomery, head of asset management at Edinburgh-based wealth manager Turcan Connell, said: ‘Investor psychology is hugely important. Have you got the stomach or the temperament to stay invested despite the negative news flow?
‘Essentially emerging market equities, particularly for sterling investors, will be volatile. However, now probably more than ever, there is a case for long-term investors having a large allocation to emerging markets.’
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15 comments so far. Why not have your say?
john kenny
Jul 06, 2010 at 10:27
Take a look at the world of Investment Trusts too!
Black Rock Latin America & TEMIT should be topping your list but they don't even get a mention.
Cheat to buy, lower annual fees.
BR LA up over 500% in 5 years! TEMIT steaming along too.
But just maybe an article like this is a sell signal....
report thisjohn kenny
Jul 06, 2010 at 10:30
Woops.
'...cheap to buy...'
report thisDavid Robert
Jul 06, 2010 at 10:53
Citywire seems to have forgotten those of us who like to buy shares direct
report thisJ
Jul 06, 2010 at 11:05
John, what is TEMIT pls.
report thisAnonymous 1 needed this 'off the record'
Jul 06, 2010 at 11:12
Templeton Emerging Markets Inv Trust (TEM)
report thisColin Newbury
Jul 06, 2010 at 15:45
John Kenny's right, you know. Both are good long-term fund.
I hope this does not signal a sell for these funds, I was pleased to see that my wife and I have four of the seven mentioned. Well, I don't know if I should be pleased or not, I wonder who actually did the research for this article and whether it's influenced by the advertisments on Cirywire? Will this comment be deleted by the moderator?
When I was working for the print industry, many moons ago, the publishers of certain magazines would garuantee a good editorial piece if we placed an advert. in their mag.
report thisGavin Lumsden (Citywire)
Jul 06, 2010 at 16:31
Colin, tempted as I am to remove your comment I will let it stand! I can assure you that Citywire strives for the highest editorial standards and that the practices you refer to have nothing to do with us.
Obviously, commercially we rely heavily on advertising and it is true that many of our advertisers are fund management groups. However, our editorial team operates entirely independently and writes without fear or favour.
The funds highlighted in the article were chosen by our research team for Citywire Selection based entirely on our analyis of their performance and investment philosophy.
Hope that helps clarify the situation!
By the way John, we aim to do a big report on investment trusts soon so keep watching this space.
report thisjohn kenny
Jul 06, 2010 at 17:49
As a small investor who likes to be responsible for his own successes and failures I haven't made an investment in any other arena for some years.
Any product that has been sold to me rather than chosen by me has always benefitted the seller and not necessarily benefitted me.
Am pretty confident that ITs are the cheapest way to get absolutely top notch managers and once you know where to look there is first class analysis available at no or minimal cost.
Look forward to your report - any timescale available?
report thisEuan Ritchie
Jul 06, 2010 at 20:57
The return comment from CityWire has to be believed - or we wouldn't be reading this BUT ...No case has been made for separating Funds from Trusts in the first place.
report thisCognoscenti 36
Jul 07, 2010 at 12:41
Trusts are outstanding but discoiunts must be watched. They can boost performance or frustrate an otherwise excellent NAV improvement. Take Aberdeen New Thai Trust as an example. Good investment record but discount seems to get larger & larger and none of the Managers of Trusts seem to have an effective answer, although I shall watch Eastern European Trust's efforts with interest.
report thisAnonymous 2 needed this 'off the record'
Jul 11, 2010 at 12:48
a great load of nothing
report thisAnonymous 2 needed this 'off the record'
Jul 11, 2010 at 12:49
Come on now.W e all need to make a living.
report thisDan Dare
Jul 11, 2010 at 13:15
Allianz BRIC Stars - what a DOG. Doesn't even match the benchmark. My £7K holding in 2007 is now only £6422. They must be playing with the graph?
report thisterence little
Jul 11, 2010 at 14:46
Investments can go up or down.And down is the way at the moment.
report thisAlexander MOFFATT
Oct 01, 2010 at 16:23
If that is John Kenny from West Malling - please contact axel49@btinternet.com
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