Will emerging markets equities outperform UK equities in 2016?

Emerging markets have had a rocky ride this year! They started off by plunging nearly 10% within the first three weeks, but spent most of March and April as market darlings, at one point up 11.4% from their 1 January level*.

This growth was supported by a weaker US currency (making emerging market countries’ US dollar debt more affordable to service); investor uncertainty causing outflows from some developed markets, such as the United Kingdom in the lead up to Brexit; and renewed interest in emerging markets in the lead up to Brazilian president Dilma Rousseff’s impeachment trial. Throughout May, enthusiasm waned slightly but emerging markets were still up 4.6% by the end of the month*.

We asked FundCalibre visitors if they thought the outperformance would continue. Just over half (52%**) said yes – they thought emerging market equities would outperform UK equities in 2016. 19%** said no and 29%** were unsure.

It can be an exciting area in which to invest and our Elite Rated emerging market equity funds offer exposure to some of the world’s fastest growing economies with potential for strong returns over the long-term.

As always, it’s important investors considering the asset class remember that emerging markets are typically more volatile than many other sectors and that the value of their investments may fluctuate, particularly over the short-term.

 

*FE Analytics, MSCI Emerging Markets, total returns in sterling, 31/12/2016–01/06/2016.

**Based on feedback from 45 FundCalibre visitors from 03/05/16 – 01/06/16.

The views of the author and any people interviewed are their own and do not constitute financial advice. However the knowledge that professional analysts have analysed a fund or trust in depth before assigning them a rating can be a valuable additional filter for anyone looking to make their own decisions. Before you make any investment decision make sure you’re comfortable and fully understand the risks. If you invest in fund or trust make sure you know what specific risks they’re exposed to. Past performance is not a reliable guide to future returns. Remember all investments can fall in value as well as rise, so you could make a loss.