In recent months, investors have been looking overseas for opportunities in emerging markets (EMs).
While some market watchers are speculating that the allure of developing markets may be fading given the prospect of higher rates on the horizon, many investors are still embracing the emerging world. BlackRock Chief Investment Strategist Russ Koesterich noted that sentiment continues to turn for EMs in his latest Market Perspectives, pointing to China as one of the best performing markets in recent months as a result of improving economic data.
What’s more, the latest flow data indicates that EM equity posted a sixth consecutive month of inflows in August, gathering $4.2 billion; broad EM, including frontier markets, posted a fifth consecutive month of inflows, totaling $1.8 billion in August.
Russ advocates a benchmark position to EMs along with a selective approach. For most investors, who have largely underweighted the asset class, this means increasing allocations.
Some potentially attractive entry points do exist but continued volatility is to be expected. You can compare individual emerging market countries by exploring three key considerations – performance, valuation and economics – with the interactive Emerging Markets Marker from BlackRock’s Investment Institute.
Click here or on the image below to launch the interactive chart.