Emerging Markets fund

RomfordNavy

Any thoughts on investing in an emerging markets fund?

Reasoning is that I suspect they have already been beaten down to such an extent that they might now represent good value for money and may not be affected as much by the ongoing quantitive tightening as the more advanced economies will.

Voyager2002

Interest rates in most (but not all) emerging markets depend on US interest rates, while the Fed makes its decisions purely on the basis of what is good for the US economy. As a result, many businesses across the world face being throttled by interest rates that are higher than is appropriate for the economies within which they operate.


Obviously stock prices have adjusted (fallen) to US interest rate rises, but it is difficult to assess whether they now represent good value: historic earnings reflect a different interest rate environment.


In sum, pick your investments with care. This is not a case for trackers, nor for a single fund that covers multiple countries since the management team would not have the necessary expertise for more than a small number of markets.

Linton

EM covers a wide range of very different countries with very different economies. Most investment opportunities are in the pretty highly developed parts of SE Asia which have world class manufacturing, engineering, and high tech companies. I think you should consider a specialist fund for this sector. Look on Trustnet for those with a good long term record. There are also some excellent ITs.

Latin America may also be worth considering but is much riskier than SE Asia. Similarly with the poorer countries in Europe. However, unless you have a very large portfolio the easiest way of investing beyond SE Asia is with a Frontiers fund but if you invest there at all it should only form a very small part of your holdings. One problem with Frontier Markets is that they do not provide good sector diversification, another is that there is a significant overlap with the smaller economies in SE Asia.

EM Bond funds may be worth considering, I hold a couple for income.

More generally you should invest in EM as part of your overall long term strategy, not because you may believe it is cheap now. I do not believe EM is a safe haven if you are worried about the developed world economies as It is still highly dependent on exports to those countries.

poppy10_2

Don't bother investing in a country/region-specific fund such as Latin America or SE Asia - it just adds risk to what is already a very volatile asset class.

There are plenty of low cost EM trackers -try these from Vanguard
https://www.vanguardinvestor.co.uk/investments/vanguard-emerging-markets-stock-index-fund-accumulation-shares
https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-emerging-markets-ucits-etf-usd-distributing?intcmpgn=equityemerging%20markets_ftseemergingmarketsucitsetfusddistributing_fund_link

Prism

You are thinking to much about the timing. All you need to decide is do you want some exposure directly to emerging markets, regardless of what might happen over the next few years relating to things like the dollar and oil price. I would also treat China a bit differently than the rest.

I currently have about 17% of my equites in EM