Investors should stop viewing emerging markets as a single asset class and instead look at the merits or issues of individual countries, Old Mutual Global Investors’ John Ventre argues.
Ventre is head of multi-manager and oversees OMGI’s Voyager, Spectrum and Generation fund ranges.
He points out emerging markets have “decoupled” from each other over recent years, with some outperforming the developed world and others underperforming rather than behaving like a cohesive whole.
Ventre says: “In our view, investors make an error by considering emerging markets as a single asset class and must move towards a more granular analysis of risks and opportunities the way they already do in developed markets.
“We would not dream of just bucketing Germany and the US together in one lump, whatever our respective views on different markets are, so we need to analyse emerging markets separately and not see see them as one amorphous bucket.”
Ventre also argues a fund manager focused on a single country is likely to have a competitive advantage over peers that have to cover a global remit as they have the opportunity to specialise.
Hargreaves Lansdown investment analyst Richard Troue says: “Going back a few years, there were more similarities between these markets and it was easier to lump them together. But as they have matured at different paces there is an argument to say they have different dynamics driving growth.”
But Troue adds investors could consider global emerging market funds to get broad-based exposure to the area and supplement this with single-country funds to access markets they are particularly bullish on.