Opportunities emerging in new marketsStephen Womack, Financial Mail 15 August 2009
Investment bank Morgan Stanley last week predicted that the Footsie 100 would break through 6,000 some time next year. Most fund managers are far less confident, however, and many investors are looking to newer markets such as Brazil, India and China. Ben Willis, head of research at wealth manager Whitechurch Securities in Bristol, said: 'There has been a definite reappraisal of *emerging markets<http://www.thisismoney.co.uk/jargon/E/emerging-markets> * in the past six months, partly because the outlook for the Western world is so bleak. 'Investors realise that many economies in the West have had to rob the profits of tomorrow to pay for today's mess and that future growth will be low.' By contrast, India's total debt is just under one fifth of GDP and China's is just over one tenth. In comparison the UK's debt is 3.3 times GDP. Stuart Richards is a partner at Hexam Capital and one of the managers for the Ignis Hexam Global Emerging Markets Fund. He says: 'Emerging markets are the future, not just in terms of economic activity but for UK pension funds. This is where the future growth in profits and earnings will come from.' Emerging markets have been quicker to bounce back from the sharp falls of last autumn than Western countries. The average global emerging markets fund has lost 13% of its value over the past twelve months, but has risen 20% over the past six months. The best performers are in profit for the past year (see below). In comparison, the average fund in the UK All Companies sector is still showing losses over the past six months, down 1.1%. Over a year the sector is down 20%. Willis said: 'We are now saying that an investor in their 30s or 40s who is looking long term could have up to 40% of their money in emerging markets. Even someone in their 60s might want to have up to 20% in emerging markets, depending on their attitude to risk.' Adrian Shandley, who runs IFA Premier Wealth Management in Southport, Lancashire, said: 'If you landed on this planet today and thought where am I going to put my money, there is no argument - emerging markets win hands down. But it will take time for investors to become comfortable with the perceived risks of investing in these markets.' Peter Woolley is a believer in the future of emerging markets. A retired accountant, he has invested £50,000 of his pension savings in the Aberdeen Emerging Markets fund. He put the money in two years ago when he transferred a company pension into a Self Invested Personal Pension (*SIPP<http://www.thisismoney.co.uk/jargon/S/sipp> *) with Hargreaves Lansdown. Peter, 60, who travelled the world during more than 20 years working in the oil industry, said: 'I've worked in Brazil and China and Russia and India and I've seen the potential there.' Peter lives in a flat in what was once a stately home in Ingrave, Essex, along with his wife Linda, 60, a primary head teacher. He said: 'I'm hopefully not going to be needing to draw on the funds for at least another five years and I'd rather that my pension had the best chance of growth in the meantime.' But investing in emerging markets certainly has risks. Corruption, political interference and unpredictable legal systems can all make it very difficult to do business. *FUND OPTIONS: Where to go * There are plenty of choices for investors who want exposure to emerging markets. One option is to pick a general emerging markets fund, with the manager deciding how to allocate the money between different nations or regions. First State Global Emerging Markets Leaders, run by Jonathan Asante and Angus Tulloch, is the topperforming retail fund over the last year. It focuses on the biggest companies. Ben Willis from Whitechurch Securities recommends Lazard Emerging Markets, managed by James Donald. 'The fund is tightly risk-controlled and is a relatively defensive portfolio,' he said. He is also a fan of the Ignis Hexam Emerging Markets fund. 'The team have a great passion and although this is a new fund, it mirrors a successful and established offshore portfolio,' he said. Another choice is to look for a regional fund where the money is targeted towards only one part of the world, such as Latin America or Eastern Europe. But Adrian Shandley at Premier Wealth Management takes a different approach. 'Sometimes a general or regional fund can become very biased towards one nation and you don't realise exactly where the money is being invested,' he said. 'I'd rather have more control and use a series of singlecountry funds to build up emerging markets holdings.' Shandley rates Gartmore China Opportunities, managed by Charlie Awdry, and Jupiter India, managed by Avinash Vazirani, as two of the stronger specialist country funds. Anyone nervous of investing directly can try a different tack, looking for the UK, US and European companies best positioned to gain from emerging markets. Willis says: 'You can get a flavour of emerging markets through funds such as M&G Global Basics, investing in mainly Western companies such as Colgate and Unilever, which will benefit from growing wealth in Russia or China.' http://www.thisismoney.co.uk/investing/article.html?in_article_id=489687&in_page_id=166&position=moretopstories -- *Power and Repose: Swami Vivekananda.* http://www.youtube.com/watch?v=BcG-jDGG4UY --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups ""GLOBAL SPECULATORS"" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/globalspeculators?hl=en -~----------~----~----~----~------~----~------~--~---
