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Portfolio > Economy & Markets > Stocks

Investors Coming Back to Emerging Market Stocks

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Investors in a new survey expressed growing interest in raising their allocation to emerging market equities over the next 12 months.

Emerging Global Advisors reported Tuesday that its EM Investor Sentiment Survey score increased by 9% in the first quarter to 538 from 495 in the previous quarter.

Forty-four percent of respondents said they expected to increase their emerging markets allocation over the next year, up from 33% in the fourth quarter.

Ninety-one asset managers and financial advisors, some two-thirds managing more than $500 million in assets, participated in the digital survey between March 1 and April 1.

Thirty-seven percent of respondents said they currently allocated between 5% and 10% in emerging markets, and 36% allocated 1% to 5%.

Forty-eight percent of investors reported that their current allocation was about the same as 12 months ago, while 37% say theirs was lower. Half of those polled said they expected to maintain their current emerging market equity allocation over the next year.

Asked their outlook for emerging market equities over the next 12 months, 42% of investors were neutral, while 33% were positive and 25% negative.

India was by far investors’ top choice as the region offering the best investment opportunity over the next 12 months, selected by 67% of respondents. Other regions investors find promising include:

  • Asia 47%
  • Latin America 34%
  • China 23%
  • Africa 16%
  • Eastern Europe 11%

Two-thirds of investors said consumer/domestic demand was the area of growth with the best investment opportunity, followed by infrastructure, technology and energy/materials.

Pollsters asked investors whether their current emerging market investment strategy aligned well with the regions and themes they thought offered the best investment opportunities.

Only 29% said yes. Half of respondents their strategy somewhat reflected the themes and regions they had selected.

“Less than a third of respondents are confident that their EM allocation reflects the regions and themes with the greatest investment opportunities in EM in the next 12 months,” Marc Zeitoun, chief product and marketing officer at Emerging Global Advisors, said in a statement.

“This survey confirms what our clients have been telling us — increasingly, they are looking to recalibrate their emerging market allocation and want help aligning their portfolios with the areas of growth.”

— Check out Have Emerging Markets Regained Their Mojo? on ThinkAdvisor.


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