Where are Emerging Market Fund Managers Investing?

In emerging markets, active fund managers are favouring consumer staples stocks but are underweight energy, materials and technology companies 

Simon Dorricott 25 July, 2017 | 11:37AM
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A switch in leadership style in 2016 saw the value style come to the fore, but looking at 2017, Morningstar’s Global Emerging Markets peer group shows some clear biases relative to the MSCI EM Index. 

At the country level the least favoured area is China, where in addition to the concerns over the rate of the slowdown in economic growth, a number of managers also have concerns over corporate governance, especially within some of the state-owned enterprises (SOEs). South Korea, Taiwan and Malaysia are the other main underweights. 

The most positively viewed country is India, which remains favoured due to its growth outlook. Managers hold different parts of the market depending on their views on valuation, but India is widely regarded as offering the best medium-term economic growth prospects among emerging markets.

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Simon Dorricott  is a Senior Fund Analyst for Morningstar