Investors seeking growth should not shy away from emerging markets, despite their recent weak performance, says James Burns, co-manager of the Smith & Williamson MPS.
Emerging markets are suffering their worst performance relative to US stocks in two decades, but Burns believes this trend is set to reverse.
He explains: “We would expect to see emerging markets grow at a faster pace than some developed markets over the next few years. There’s no reason to assume that other regions in the world can’t grow but we think that emerging markets are looking more attractive than they have done for some time.”
The Smith & Williamson MPS holds a number of actively managed funds, noting that passives haven’t “covered themselves in glory” in the emerging markets regions, with many unable to track the market with the same efficiency as they have with the US and European markets.
Smith & Williamson said the BlackRock Emerging Markets Equity Strategies fund, which it holds in its higher risk portfolios, should act as a good diversifier in the long-term, having performed well so far this year.
The firm also favours the Goldman Sachs India Equity Portfolio.
Burns adds: “Whilst we have trimmed the fund previously, we are positive on the long-term outlook for India, as despite not having the same global industry leading companies, it is somewhat of a safer market than China given the latter’s government risk.”
