Chances are you haven’t liked investing in Emerging Markets
for the last 5 years:
As the red-headed equity step-child, Emerging Markets have
been extraordinarily disappointing. Global
Fund Managers haven’t taken too kindly to this performance, and have decided to
put less and less dollars there:
The good news is since Emerging Market equities have been loathed nearly as much as A-Rod they are now attractively priced:
JP Morgan
In fact, the case can be made Emerging Market equities offer
better forward return prospects than any other equity asset class.
GMO
So is now the time to buy?
It could be. But I want to see
the markets validate this before I make any overweight recommendations. Market trends can persist for a long-time,
both on the way up and on the way down. Thus,
my current Emerging Markets Equity Strategy:
Current Market Scorn + Attractive Valuations = Wait for Trend
Reversal + Then Start to Build an Overweight Position.
This way (in theory) I can insulate myself from the “falling
knife” and still capture a decent chunk of the upside. That could be next month or next year, but
whenever it is the returns of that asset class should be attractive on a
risk/reward basis.
The views and opinions expressed herein are those of the
author(s) noted and may or may not represent the views of Capital Analysts,
Inc. or Lincoln Investment. The
material presented is provided for informational purposes only. Nothing
contained herein should be construed as a recommendation to buy or sell any
securities. As with all investments, past performance is no guarantee of future
results. No person or system can predict the market. All investments are
subject to risk, including the risk of principal loss.
