Retail clients cotton on to emerging market trend

As fund managers continued to talk about the attraction of the emerging world, one in ten working adults in the UK said they are considering investing in these markets over the next year, with men being three times more likely to make an allocation.

Research by Baring Asset Management showed that 4.7m people are thinking about making an allocation to emerging markets. This shows that 15% more people have been convinced by the emerging story, as compared to last year.

Of those planning to invest in emerging markets for the long term, 41%, that is, 5.3 million, would select a portfolio that covered all investible emerging markets. When investing in emerging markets for the short-term, over a third of people would opt for funds covering just the Bric countries (Brazil, Russia, India and China).

Barings found that respondents aged 25 to 34 are the most likely to invest in emerging markets in the next year. This is would account for 18%, which is almost double the number of those aged 35 – 44 or those aged 45 – 54.
According to the research, men are three times more likely to invest in emerging markets than women with 15% of men likely to invest in the next year compared with just 5% of women.

Marino Valensise, CIO at Barings, said: “It has been a turbulent year for all economies around the world including the emerging markets but it seems that, like us at Barings, consumers have faith in the long-term growth prospects of these markets. We believe we are at the optimum point in the global economic cycle for investing in emerging markets. The fact that an increasing number of people are considering emerging markets funds for investment is really encouraging.

“The investment case for emerging markets is compelling. Emerging markets are attractively valued, the global economic recovery and continued low interest rates are supporting emerging market growth, consumer spending is on the rise and demographics are supportive. Looking specifically at regions, we expect to see growing interest in Mena (Middle East and North Africa) and Asean (South East Asian nations) markets.”

The retail market has a history of getting in on investment trends at their peak and getting out as they fall. Arguable, the Barings results could indicate that the emerging markets are about to cool down, or that the retail market is on target this time.