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.

This article is provided for information only. The views of the author and any people quoted are their own and do not constitute financial advice. The content is not intended to be a personal recommendation to buy or sell any fund or trust, or to adopt a particular investment strategy. 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. Past performance is not a reliable guide to future returns. Market and exchange-rate movements may cause the value of investments to go down as well as up. Yields will fluctuate and so income from investments is variable and not guaranteed. You may not get back the amount originally invested. Tax treatment depends of your individual circumstances and may be subject to change in the future. If you are unsure about the suitability of any investment you should seek professional advice. Whilst FundCalibre provides product information, guidance and fund research we cannot know which of these products or funds, if any, are suitable for your particular circumstances and must leave that judgement to you. Before you make any investment decision, make sure you’re comfortable and fully understand the risks. Further information can be found on Elite Rated funds by simply clicking on the name highlighted in the article.