Research conducted by Rplan.co.uk reveals that 27 per cent of retail investors claim to have over 20 per cent of their investment portfolios in emerging market investments, from the 755 investors interviewed.
The research also confirms IFAs, from 137 professionals interviewed, as having a relatively high level of emerging market investments for their clients, with 14 per cent of IFA clients having a quarter or more of their portfolios in emerging market equities and debt.
Given the political unrest in Russia and Ukraine, together with parts of Latin America and the Middle East experiencing economic uncertainty, the research comes as something of a surprise to Rplan.co.uk’s CIO, Stuart Dyer, who says many retail investors may not be aware of the risks involved.
Dyer says: “Emerging markets have been flavour of the month in the investment world for many years and the marketing literature has really pushed the potential upside here, but there has not been enough focus on the risks involved, which can be substantial.”
According to Rplan.co.uk, there are 135 emerging market funds being promoted to retail investors in the UK, with 96 per cent having the two highest risk rankings of six and seven. These risk rankings have annualised volatility of 15-24.99 per cent or over 25 per cent respectively.