Advisers are mixed on their allocation plans for emerging markets, according to the latest FT Adviser poll for Talking Point.
Advisers were asked: How likely are you to increase your allocation to emerging markets over the next 12 months?
Almost half (47 per cent) said it was likely, 37 per cent said it was unlikely, while the remainder (16 per cent) were unsure.
Commenting on his approach to emerging markets, Philip Dragoumis, director and owner at Thera Wealth Management, said the company held around a 10 per cent allocation to emerging markets within the equities portion of its client's investments and zero in bonds.
“This is pretty much in line with the global indices. We use emerging market equity index funds,” Dragoumis added.
Also, while emerging markets have “markedly underperformed” the US in the past decade, Dragoumis said it was worth noting that they significantly outperformed in the 2000s.
He added: “India has done well but China, which is still struggling to get back to its high levels of growth after Covid, has done badly. The region is still home to most of the world's population, accounts for most of its growth and future prospects, and has inexpensive valuations.
“We think it still makes sense to continue to allocate to the region at least in line with global market cap-weighted indices.
“It's interesting that Japan has recently been much keener to take measures to improve shareholder value and this is having a positive effect on its market. China may well do the same.”
Meanwhile, Samuel Mather-Holgate, an independent financial adviser at Mather and Murray Financial, said India and Mexico are regions to watch.
Mather-Holgate said: “India is set to be the 'new bull', with a population set to overtake China and a thriving IT sector, both internal and international businesses could thrive here in the next five years.
“Mexico is also a good bet, with US outsourcing coming back from the east to a more local country. Finally, Vietnam [is] the gem that hasn’t yet sparkled. This could be the year things emerge."
ima.jacksonobot@ft.com
