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Advisers Up Exposure to Asian Equities

Emerging markets fell from favour following lat year's US to begin tapering QE. Now they are back on the agenda for financial advisers

Emma Wall 6 June, 2014 | 12:53AM

Investors may be cautious of emerging markets – but financial advisers are ready to make the leap. According to a results from BlackRock’s London Investment Conference three quarters of financial advisers will be increasing their clients’ exposure to Asian equities in the second half of 2014. Two fifths of advisers said they would be increasing emerging market investment.

This coincides with the conclusion of the Federal Reserve’s tapering programme for quantitative easing, which is expected to wind down in October. When Ben Bernanke, then Fed chairman, announced plans to taper QE last May is caused turmoil in emerging markets. In particular the currencies of Turkey, Brazil, India, Indonesia and South Africa all suffered at tapering rumours. Those Fragile Five nations had grown in an environment of cheap and easy money and therefore were most affected.

Brian Jacobsen from Wells Fargo Asset Management said that it was not tapering itself that caused emerging markets to go into a tailspin, but the timing.

“The Fed deviated from a pre-announced schedule. The markets expected tapering to be announced in the second half of 2013, and therefore the news in May was a shock,” he said.

“If the Fed sticks to the plan of a slow reduction in bond purchases month by month until QE is completely wound down in October or November then emerging markets will not be negatively affected by tapering. It is deviation that causes havoc.”

Top Rated Asian Equity Funds

Fidelity Emerging Asia

Morningstar Analyst Bronze Rating

Fidelity Emerging Asia strategy allows the opportunity to invest in emerging Asian countries with the support of one of the most resourced regional teams in the market, says Morningstar analyst Arne Hilke. The strategy invests mainly in India and China as well as ASEAN countries.

Schroder Asian Alpha Plus

Morningstar Analyst Silver Rating

Schroder Asian Alpha Plus gives investors access to a talented portfolio manager, says Morningstar analyst Amaya Assan. The chief attraction here is manager Matthew Dobbs, who has been running money since 1985. Dobbs seeks to gain a competitive advantage from proprietary research using a wide source of investment ideas. He has an instinctive feel for Asian markets but his approach does have the medium to longer term in mind.

Invesco Asian Equity

Morningstar Analyst Bronze Rating

Invesco Asian Equity remains a strong choice in the peer group. The fund continues to benefit from one of the most experienced managers covering the region in Stuart Parks, who has specialised in Asian equity markets since 1990, says Morningstar analyst Lena Tsymbaluk. The supporting team consists of four investors and has remained stable through the years. The combination of top-down and bottom-up analysis in the team's approach has been consistent

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Fidelity Emerging Asia A-Dis-GBP2.06 GBP-0.43
Schroder Asian Alpha Plus A Acc1.43 GBP-0.69

About Author

Emma Wall  is former Senior International Editor for Morningstar

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