Smart Strategies for Emerging Market Investors
The growth opportunities in emerging markets are clear. The best way to take advantage of them, however, is not. Sometimes the most popular investing route is not the best way to get exposure to these fast-growing and volatile markets, and investors would do well to investigate less traditional ways of gaining exposure to the region. (Photographer: Keren Su/China Span)
Everyone, it seems, knows that emerging markets are where the growth is these days. Far less obvious, though, is the best way to profit from their growth. Some of the trendiest investing options have serious drawbacks.
Even the best emerging market mutual funds have down years. While the Wasatch Emerging Markets Small Cap fund (WAEMX) has bested 99 percent of other emerging market mutual funds over the past three years, it has lost 10.1 percent so far this year.
Investors are waking up to Africa -- finally. Not just Egypt and South Africa, but such countries as Ethiopia, Ghana, Malawi, Nigeria, Tanzania, and Uganda. The reason: As the continent moves more of its resources into industry and services, it stands to become an economic powerhouse, making its citizens wealthier and its influence more global.
Mark Mobius is targeting Nigeria’s roads, bridges and electricity generation as the government of Africa’s most-populous nation brings in private investors to help develop the country’s infrastructure.
Kerry Stokes made his first billion dollars operating television stations and selling dump trucks in his native Australia. Now, he’s betting a chunk of that fortune on a bank that operates in the backwaters of rural China.
Bharti and Sun Art Retail Group Ltd., a Chinese hypermarket operator, are among companies that will join the MSCI Emerging Markets Index, according to an MSCI statement dated Nov. 15. Lundin, Herbalife Ltd. and Kansas City Southern (KSU) of the U.S. will be the largest additions to the MSCI World Index.