Templeton's head of emerging markets, Dr Mark Mobius, believes emerging markets have decoupled from ...
Templeton's head of emerging markets, Dr Mark Mobius, believes emerging markets have decoupled from the Nasdaq and therefore offer better diversification options.
He said that during the growth rally, emerging markets became increasingly correlated to the Nasdaq, hence weakening the diversification rationale for investing in the sector and driving investors out, according to a report by Martin Fothergill, investment trust analyst at Deutsche Bank.
Mobius believes the markets have now decoupled and assets will shift back into them, providing structural support.
According to Templeton, many emerging markets are still at low levels and are benefiting from lower interest rates, which make debt burdens easier to cope with.
Currently, Mobius' £564m Templeton Emerging Markets trust has 24.6% of assets in Latin America, 37.6% in Asia, 11.6% in Europe, 15.7% in Africa, 7.4% in the Middle East and 3.1% in liquid assets.
Mobius favours the South African market but is underweight in Latin America, where he is keen on Mexico. In Asia, he is increasing the portfolio's weighting in Korea and is overweight in Thailand and Indonesia.
Mobius said emerging markets continue to be hampered by news of corruption and bad corporate governance but, in reality, governance is improving.
The trust is ranked second in its sector over one and three years to 6 June with mid to mid returns of 0.5% and 15% respectively, compared to sector averages of -4.8% and 4.9%.www.ifaonline.co.uk
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