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Emerging markets equities set to trade at a 'premium' says Barings Go compare with our comparison table

Emerging markets equities set to trade at a 'premium' says Barings

12 October 2010 / by Paul Dicken

Stocks in emerging markets will trade at a premium compared to equities in developed economies in as little as five years, an asset manager has said.

Marino Valensise, the chief investment officer at Baring Asset Management said emerging economies would continue to outperform established ones with stocks trading at higher prices.

“Emerging market equities are still not a consensus story despite the fact they currently account for 70 per cent of global GDP growth. The US is a perfect example of a region that has yet to fully recognise the outstanding investment opportunities on offer,” he said.

Valensise said emerging markets in Asia had outperformed the developed world by 186 per cent over the last 11 years, but some major investors, such as US pension funds, still had limited exposure to these areas of growth.

The average allocation to emerging equities by a US pension fund is one per cent, according to Barings. Valensise said that was likely to change as the ‘US wakes up to the returns on offer’.

“On a regional basis, we find ASEAN 4 interesting (Indonesia, Thailand, Malaysia and Philippines) as they are smaller and more inward looking markets based on domestic consumption, rather than those larger markets that are driven by exports and resources,” Valensise added.

Allianz launch Brazil fund

Commenting on the recent launch of a dedicated Brazil fund by Allianz Global Investors, Andy Parsons, advice team manager at The Share Centre stockbrokers said UK investors now had the opportunity to invest ‘predominantly in Brazil.’

“In terms of investor opportunity, the region is still seen predominantly as a play on commodities. However, it is the fifth largest country in the world, has favourable demographics, a buoyant middle class, rising employment and wages, and is currently the second largest destination within the emerging markets for foreign direct investment,” Parsons said.

The major emerging market economies, collectively known as the BRICs, are Brazil, Russia, India and China.

Parsons said the Allianz RCM Brazil fund is the first open ended investment company (OEIC) specifically investing in Brazil within the UK funds sector.

Manager of the fund, Michael Konstantinov, has described Brazil as ‘finally unleashing its potential’ in commodity markets through its large domestic economy – the dominant driver for economic growth in the country.

© Fair Investment Company Ltd

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Income Paid Quarterly. Investing in higher yielding assets which will include most types of fixed interest securities, this fund aims to deliver a quarterly income to investors. See latest fund factsheet for details.
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Income Paid Quarterly.The objective of the Sub-Fund is to achieve income together with long-term capital growth predominantly through investments in securities in Asia Pacific ex Japan (including Australia & New Zealand) region. The Sub-Fund may also invest in collective investment schemes. See latest fund factsheet for details.
Newton Higher Incomeyes5.4%More Info >
Income Paid Quarterly. The objective of the Fund is to achieve increasing distributions on a calendar year basis with long term capital growth. The Fund may also invest in collective investment schemes. See latest fund factsheet for details.
Invesco Perpetual Distributionyes4.7%More Info >
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Invesco Perpetual Monthly Income Plusyes4.46%More Info >
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Woodford Equity Income Fundyes3.50%More Info >
Our selected partner for investing in Neil Woodford's Equity Income fund is Barclays Stockbrokers, via their INVESTMENT ISA for new ISAs and ISA transfers, or their MARKETMASTER® ACCOUNT for non-ISA investments. Income Paid Quarterly.The fund’s investment objective is to provide investors with long-term appreciation through investing in stocks primarily listed on the UK stock exchanges. Up to 20% may be invested in international companies. The income objective is 10% higher than the FTSE All Share Index yield with an anticipated annual yield of 4.0%.
Newton Global Higher Income yes4.7%More Info >
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M&G Optimal Incomeyes2.44%More Info >
Income Paid Twice Yearly.The fund aims to provide a total return to investors based on exposure to optimal income streams in investment markets. The fund invests across a broad range of fixed income assets according to where the fund manager identifies value. See latest fund factsheet for details.
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