Emerging markets offer challenge, opportunity
Dominic Johnson, chief executive of London-based boutique Somerset Capital Management, has been brought to New Zealand by Tower Investments, which recently chose Somerset as its emerging markets manager for international equity portfolios, replacing Capital International.
Johnson said exposure to emerging markets was important for the growth component of portfolios but financial advisers needed to be wary of their volatility, which could spook investors and cause them to pull out if risks are not managed carefully.
“The biggest problem with emerging markets is that people buy high and sell at the bottom; themes often come to people’s attention when the cycle is at its conclusion.”
He said there had been five major crashes since he began investing in emerging markets in 1995, yet during this time even investing in the index would have returned 400%.
Click the button below to subscribe and will have free unlimited access for a limited time to full article and all other articles on the site.
You will also be able to comment on articles on Good Returns.
