Critics call for emerging markets label to be axed

29 September 2011 | By Gary Jackson, Joanne Ellul

Standish Mellon Asset Management Company is urging the investment industry to drop the “inconsistent and vague” term emerging markets.

The company, which is the fixedincome specialist for BNY Mellon Asset Management, says the 30-year-old term fails to represent the wide range of countries and asset classes associated with it.

Standish managing director and senior portfolio manager Alexander Kozhemiakin says the term emerging markets is “a deficient investment concept as it is inconsistent and vague”.

He says: “Traditional divisions between developed and emerging markets are blurring, as some countries in the former category display higher levels of risk and a more serious degradation of fundamentals than countries in the latter.”

The manager says one problem with the label is that it is applied to both countries and markets. However, one country can have a number of markets, such as equities, bonds and currencies, which may all display different characteristics.

Chelsea Financial Services managing director Darius McDermott says the emerging market label is still useful. He says: “Emerging markets tend to be more volatile and can react badly in stressful periods. Emerging markets got absolutely hammered in 2008, which was not that long ago.”

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