Reasonable returns predicted for emerging markets
Emerging markets have outperformed Australian equities for the year to June 2015 for the first time in five years, according to Lonsec.
The research house's global emerging markets and regional equities report said investors should expected reasonable returns form emerging markets but should adopt a measured long-term approach and be prepared for periodic selloffs.
The report said ongoing volatility has continued to spook investors with Lonsec predicting that this year is likely to be the third consecutive year of outflows form the asset class thanks to ongoing global growth fears.
Lonsec senior investment analyst and principal author of the report, Steven Sweeney, said for this year fund managers who positioned portfolios more towards Asia and avoided Russia and Brazil tended to achieve improved performance outcomes.
"Retail investors and their financial advisers should consider a measured allocation to emerging markets with exposure to higher performing economies, such as Asia, from a long-term perspective," Sweeney said.
"Financial advisers should consider client risk tolerance and be mindful of overall exposure to developing economies within the global equities allocation."
Sweeney noted the recent swing between buying and selloffs were just businesses as usual for emerging markets investors.
The report said Asian equities delivered 15 per cent in 2014 and 27 per cent for the year to 30 June 2015, thanks to a strong Indian equities and a rebound in sentiment for Chinese equities. Indian equities were the standout performer delivering 35 per cent in 2014 and 27 per cent for the year to 30 June 2015.
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