Martin Gilbert, the chief executive of Aberdeen Asset Management, told Funds Europe that the recent emerging market rally is “unloved”, with not much money going into the asset class.
But Gilbert, speaking on the sidelines at the FundForum conference, said emerging markets will gather momentum and he cited a recent International Monetary Fund statistic showing that two-thirds of the world’s growth will come from Asia.
Asset allocation – and therefore active management – is the key for emerging market investors, said Gilbert. If a manager had been underweight in Russia, China and Brazil in recent times they would have done reasonably well.
Gilbert’s top picks for emerging markets are currently India and Brazil.
Some of the yields that Brazilian government bonds reached were extremely high, up to 16% for local currency bonds at one point. He said that in local currency terms, Brazil has been “amazing”, returning 30% since the beginning of the year.
India is another market that Gilbert is overweight in. Despite assets being expensive, Gilbert said the quality of companies was good and they were very well run.
One of the main risks Gilbert identifies in emerging markets is political risk, which has impacted Brazil and Malaysia. However, he maintained that once these risks have been overcome or at least downgraded, there are some great companies in these jurisdictions to invest in.
©2016 funds europe
