EMs poised to ‘fire on all cylinders’ – S&W’s James Burns

James Burns, co-manager of the Smith & Williamson Managed Portfolio Service, comments:

“It is no secret that Emerging Markets have yet to fire on all cylinders.

“Emerging Markets are suffering their worst performance relative to US stocks in two decades. But we think this trend is set to reverse, and investors looking for growth should not shy away from investing in Emerging Markets.

“We would expect to see Emerging Markets grow at a faster pace than some developed markets over the next few years. There’s no reason to assume that other regions in the world won’t grow, but we think that Emerging Markets are looking more attractive than they have done for some time.

“To take advantage of this opportunity, we hold a number of actively managed funds in our Managed Portfolios. We feel that passives haven’t covered themselves in glory in the Emerging Markets regions, and many, with their substantial costs involved, have been unable to track the market with the same efficiency as they have with the US and European markets.

“We hold the BlackRock Emerging Markets Equity Strategies fund in our higher risk portfolios as it should, in the long term, act as a good diversifier, given its contrarian value slant. Despite a poor year in 2020, it has performed well year to date.

“We also like the Goldman Sachs India Equity Portfolio, which we again hold in our more growth-focused portfolios. Whilst we have trimmed the fund previously, we are positive on the long-term outlook for India, as despite not having the same global industry leading companies, is somewhat of a safer market than China given the latter’s government risk.”